Another Proof of Marx's Folly: Cuba

[asianobserve]

Why the U.S. Should Drop the Embargo and Prop Up Cuban Homeowners
Posted by Tim Padgett Saturday, November 5, 2011 at 11:26 am
Global Spin - A blog about the world, its people and its politics - TIME.com


It wasn't too surprising when Cuba announced on Thursday, Nov. 3, that people on the communist island may now buy and sell private homes. They can buy two, in fact Рone in the city and one in the country, perhaps for those weekends when you just need to get away from your neighborhood's Committee for the Defense of the Revolution. President Ra̼l Castro, who has to liberalize his moribund economy to keep it afloat, had already said Cubans could own cars and businesses; purchasing real estate wasn't that big a leap.

And yet, it is. That's because more than any of Castro's previous reforms, it opens the door to something Cuba hasn't experienced much of since the 1959 revolution: real economic development. And that stands to make Washington's 49-year-old trade embargo against Cuba look all the more futile.

Thursday's home-ownership decree ratchets up the debate about whether Castro's reforms are a nod to China's communism-cum-capitalism model, or whether, as Castro keeps insisting, they're simply a means of preserving Cuban socialism. The answer: Whatever. It's all just an ideological semantics game at this point, because what matters is that Cubans will now have one of the most valuable tickets to the formal economy: legal title to salable property.

Cubans, despite their universal health and education, have for the past half century been scraping by in the underground informal economy – what they call resolver, or solving the hard quotidian shortages of communist life as shrewdly (sometimes illicitly) as they can. In that regard, brain surgeons in Havana are largely in the same boat as slum squatters from Caracas to Calcutta: they've had no legal title to assets like houses that they could use either for profitable trading or for loan collateral. But as the Peruvian economist Hernando de Soto points out in his 2000 book The Mystery of Capital – still one of the best treatises on how to unlock development – formalizing property ownership can start an economic chain reaction, galvanizing more robust and widespread commerce and tax collection. "Money," De Soto wrote, "presupposes property."
It's safe to suppose more money will pour into Cuba now. In the past couple years, Cubans have received some $2 billion in remittances from relatives abroad, and that may well rise now that there's house-buying to be done – enough house-buying, in fact, to make a Florida real estate broker weepy nostalgic. Financing those home purchases must be done via Cuba's central bank; still, depending on new banking regulations that Castro is expected to spell out, homeowners may be able to secure credit and capital outside the central bank to improve their houses or, more important, to start or expand the private businesses that Castro hopes will absorb the up to 1 million state workers he needs to lay off. Foreign bankers and NGOs will be eager to funnel loans to a market of 11 million well educated, entrepreneurial people who live just 90 miles from Florida and remind the world of the Chinese a generation ago.

If Castro allows that – and he can't successfully wean a million Cubans off the dilapidated state economy if he doesn't make sure their enterprises are sufficiently bankrolled – the island could begin to see genuine economic opportunity emerge. Politically that can make a populace either restless or relaxed. But either way, the embargo hardliners in the U.S. can't just keep screaming that money that goes into Cuba simply props up the Castro regime and its human-rights abuses.

Like it or not, we're beyond that – just as we've been beyond it in communist China for a generation now. Property ownership promises to jumpstart the kind of economic heartbeat that an embargo, especially an ineffective unilateral trade blockade like Washington's, can't really stop. So the only question now is whether the U.S. loosens, or better yet gets rid of, the embargo so that Washington can let the kind of yanqui investment into Cuba that props up families and entrepreneurs – so that when political change does come to Cuba after the Castro regime fades away we'll have sown some goodwill and influence there – or whether it turns its back on them so it can keep indulging the regime-overthrow delusions of the embargo lobby simply because the Beltway still fears that Cuban-American votes can swing elections in Florida.

One of De Soto's more salient points is that the economy-generating effects of legal property ownership – the "institutional framework to produce wealth" – was one of the key factors in making U.S. capitalism so successful over the past two centuries. It may not lead to a Caribbean Spring in Cuba – but then, neither has five wasted decades of embargo. The bottom line is that Washington needs to conjure the common sense to engage alternatives when Castro himself provides them.



Read more: Why the U.S. Should Drop the Embargo and Prop Up Cuban Homeowners - Global Spin - TIME.com

 

[W.G.Ewald]

So Time thinks we should prop up Cuban homeowners now? The US government propping up US homeowners really did not end well.

 

[asianobserve]

It did not end well because the American housing bubble's collapse left an enormous void that cannot be filled by tea bags. There's no bubble in Cuba, not yet.

 

[The Messiah]

Yet mighty usa is refusing to trade with miniscule cuba and has imposed trade embargo for decades. Cuba 90% trade was with usa.

And second of all if you delusional numpty had read anything about marx then you would know that socialism was never intented by him to be applied on poor or developing countries. It was only meant of developed countries.

 

[asianobserve]

Marxism is a hopeless movement rendered irrelevant by its own flaws. At the center of Marxism is state culture. This is the reason that it will never attract widespread following in developed, affluent and educated societies. Affluent and educated people simply will not allow themselves to be "dictated" upon by "proletarians." The only countries that it can fool are the poor and desperate ones. The sort of what Cuba and the USSR were before their flirts with socialism.

 

[The Messiah]

Marxism is a hopeless movement rendered irrelevant by its own flaws. At the center of Marxism is state culture. This is the reason that it will never attract widespread following in developed, affluent and educated societies. Affluent and educated people simply will not allow themselves to be "dictated" upon by "proletarians." The only countries that it can fool are the poor and desperate ones. The sort of what Cuba and the USSR were before their flirts with socialism.

Educated only spout about socialism

norway, sweden are pretty socialistic...you think they are in the dumps ?

 

[Naren1987]

Educated only spout about socialism

norway, sweden are pretty socialistic...you think they are in the dumps ?

Norway and Sweden are homogenous, yet meritocratic Socialist countries, for now, more hetereogenous they get, the more cultural Marxism you have and hence, you have more inefficiency, higher crime rates, etc.
It's not possible for India to have the best Govt services because only 50% of the posts are based on merit(in some states, even lower).
The only solution for India is less Red tape, ie, Right Wing libertarianism.
This is why NHS, while worked well for Britain, will be a disaster for the Yanks.
The best solution is a tax rebate for anyone willing to pay for services like Health,Education for the less fortunate people.
Cut the middle man.

 

[The Messiah]

It's not possible for India to have the best Govt services because only 50% of the posts are based on merit(in some states, even lower).
The only solution for India is less Red tape, ie, Right Wing libertarianism.

Problem of India is not left wing or right wing or mixed economy but rather our work culture and chalta hai attitude.

Govt employs more people than needed and then they all slack around. Because govt's motivation is not to make a profit from a business (like railways). We need more private companies manufacturing in India. Socialism right now is not suited for India and wont be for a long time.

 

[asianobserve]

Educated only spout about socialism

norway, sweden are pretty socialistic...you think they are in the dumps ?

I guess it's you who should read again the Das Kapital. Not even the most creative trickster can make those countries socialistic. Those countries have some of the World's biggest private companies. Those countries even have Kings!

 

[The Messiah]

I guess it's you who should read again the Das Kapital. Not even the most creative trickster can make those countries socialistic. Those countries have some of the World's biggest private companies. Those countries even have Kings!

It seems you are only satisfied with superficial things. Here a yankee paper will be most useful.

Thriving Norway Provides an Economics Lesson

OSLO — When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway's Socialist finance minister and a longtime free market skeptic, did more than crow.

As investors the world over sold in a panic, she bucked the tide, authorizing Norway's $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway 's economic output.

"The timing was not that bad," Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.

The global financial crisis has brought low the economies of just about every country on earth. But not Norway.

With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.

And in the midst of the worst global downturn since the Depression, Norway's economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent.

By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.

Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries.

Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined.

Norway's relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P.

"The U.S. and the U.K. have no sense of guilt," said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. "But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility."

Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians' feelings about debt this way: "We cannot spend this money now; it would be stealing from future generations."

Mr. Wekre, who paid for his house and car with cash, attributes this broad consensus to as the country's iconoclasm. "The strongest man is he who stands alone in the world," he said, quoting Norwegian playwright Henrik Ibsen.

Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country's G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.

As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.

Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence.

Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat.

Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway's once-sturdy work ethic.

"This is an oil-for-leisure program," said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy.

"We have become complacent," Mr. Mork added. "More and more vacation houses are being built. We have more holidays than most countries and extremely generous benefits and sick leave policies. Some day the dream will end."

But that day is far off. For now, the air is clear, work is plentiful and the government's helping hand is omnipresent — even for those on the margins.

Just around the corner from Norway's central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs.

Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. "I don't blame anyone," he said. "The Norwegian government has provided for me the best they can."

To Ms. Halvorsen, the finance minister, even the underside of the Norwegian dream looks pretty good compared to the economic nightmares elsewhere.

"As a socialist, I have always said that the market can't regulate itself," she said. "But even I was surprised how strong the failure was."

Norway Thrives by Going Against the Tide - NYTimes.com

 

[asianobserve]

The party maybe named "Socialist Party" but that party's ideology is actually an altogether different animal than the "dictatorship of the proletariat" "wipe the capitalist class" socialism espoused by Marx. Haven't you read the article, the Norwegian government is setting aside $60 billion dollar of their sovereign wealth fund (think of Singapore) for a Worldwide stock buying spree (because quiet frankly stocks everywhere are a bargain right now).

Now, in Marx's socialism, is there such a thing as stocks and the stock market? Free market? private ownership? Multibillion dollar private companies? Constitutional monarchy? Please for your own sake, if you are truly Marx follower, read again his bible. You're due for reeducation brother.

 

[asianobserve]

Actually, Wikipedia can be a good material for reminding you of what Marx stood for. Here are the outline of the immediate aims of the proletarians when they rise to power:

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.
10. Free education for all children in public schools. Abolition of children's factory labour in its present form and combination of education with industrial production.

 

[Naren1987]

Problem of India is not left wing or right wing or mixed economy but rather our work culture and chalta hai attitude.

Govt employs more people than needed and then they all slack around. Because govt's motivation is not to make a profit from a business (like railways). We need more private companies manufacturing in India. Socialism right now is not suited for India and wont be for a long time.

What is the reason behind this Chaltha hai attitude, I blame the electorate for being too distracted along the lines of Caste, Religion , etc.
For example, if the German Public sector was this vomit-inducingly inefficient, they'd simply vote out the people in charge, but not so in India, you have a very good chance of keeping your job if your ethnic/religious group is from the more favourable electorate.

 

[W.G.Ewald]

The party maybe named "Socialist Party" but that party's ideology is actually an altogether different animal than the "dictatorship of the proletariat" "wipe the capitalist class" socialism espoused by Marx. Haven't you read the article, the Norwegian government is setting aside $60 billion dollar of their sovereign wealth fund (think of Singapore) for a Worldwide stock buying spree (because quiet frankly stocks everywhere are a bargain right now).

Now, in Marx's socialism, is there such a thing as stocks and the stock market? Free market? private ownership? Multibillion dollar private companies? Constitutional monarchy? Please for your own sake, if you are truly Marx follower, read again his bible. You're due for reeducation brother.

How many marxists do you think have read Capital (Das Kapital)?

 

[asianobserve]

Cuba
NY Times
Updated: November 3, 2011


Overview

A half-century ago, on Jan. 1, 1959, Fidel Castro brought down the curtain on Fulgencio Batista's right-wing dictatorship in Cuba. America's cavorting, and its commerce, ceased. Miami became Cuba's second city as, over the years, hundreds of thousands fled communist rule.

Cuba as a country has been seemingly locked in time since its revolution. But through a labyrinth of rations, regulations, two currencies and four markets (peso, hard currency, agro and black), people make their way, though the going is hard. The world economic crisis plunged Cuba into an abyss not seen since the years after the Soviet Union collapsed. Before that, the island of 11 million people suffered decades of economic deterioration.

The ailing Mr. Castro, 84, has handed over the presidency to his younger brother, Raúl, 80. Since officially taking over in 2008, the younger Castro has offered blunt assessments of Cuba's condition and has pushed for economic reforms.

In November 2011, Cuba announced that it will allow real estate to be bought and sold for the first time since the early days of the revolution, the most important of the free-market changes.

The new law, which takes effect Nov. 10, applies to citizens living in Cuba and permanent residents only. It limits Cubans to owning one home in the city and another in the country, an effort to prevent the accumulation of large real estate holdings.

The law requires that all real estate transactions be made through Cuban bank accounts so that they can be better regulated, and says the transactions will be subject to bank commissions. Sales will also be subject to an 8 percent tax on the assessed value of the property, paid equally by buyer and seller.

Cuban exiles will not be allowed to purchase property on the island since they are not residents. Still, they will be able to send money to help relatives buy new homes, and there was speculation some might try to buy homes themselves through frontmen, something the government would likely try to prevent.

The change follows October's legalization of buying and selling cars, though with restrictions that still make it hard for ordinary Cubans to buy new vehicles.

Raul Castro has also allowed citizens to go into business for themselves in a number of approved jobs — everything from party clowns to food vendors to accountants — and has pledged to streamline the state-dominated economy by eliminating half a million government workers.

Still, nothing promises to transform life in Cuba like the sale of private property, and Cuban-Americans are likely to be heavily involved.

Even so, one thing that is unlikely to change is sour relations between Cuba and the United States. A series of misunderstandings, missteps and perceived slights has meant that both countries, after a moment of warmth, have slipped back into a 50-year-old pattern of cold distrust.

President Obama campaigned for greater engagement with Cuba, and months after he took office, he headed in that direction, abandoning longstanding restrictions on the ability of Cuban-Americans to visit the island and send money to relatives. The Cuban government responded quickly.

But the case of Alan Gross, an American contractor serving a 15-year sentence for distributing satellite telephone equipment in Cuba, has helped to unravel whatever good will had been established.

Fidel's Cuba

For good or ill, Fidel Castro was without a doubt the most important leader to emerge from Latin America since the wars of independence of the early 19th century, not only reshaping Cuban society but providing inspiration for leftists across Latin America and in other parts of the world. But he never broke the island's dependence on commodities like sugar, tobacco and nickel, nor did he succeed in industrializing the nation so that Cuba could compete in the world market with durable goods. Since the fall of the Soviet Union and the end of its aid to the island, Cuba has limped along economically, relying mostly on tourism and money sent home from exiles to get hard currency.

Cuba remains a repressive society. After seizing power, Mr. Castro promised to restore the Cuban constitution and hold elections. But he soon turned his back on those democratic ideals, embraced a totalitarian brand of communism and allied the island with the Soviet Union. He brought the world to the brink of nuclear war in the fall of 1962, when he allowed Russia to build missile launching sites just 90 miles off the American shores. He weathered an American-backed invasion and used Cuban troops to stir up revolutions in Africa and Latin America.

Those actions earned him the permanent enmity of Washington and led the United States to impose decades of economic sanctions that Mr. Castro and his followers maintain have crippled Cuba's economy and have kept their socialist experiment from succeeding completely. The sanctions also proved handy to Mr. Castro politically. He cast every problem Cuba faced as part of a larger struggle against the United States and blamed the abject poverty of the island on the "imperialists" to the north.

Cuba Under Raúl

Raúl Castro has seemed to take more pragmatic approach to governance than his older brother. He has given signals he might try to follow the Chinese example of state-sponsored capitalism, and has often pledged to make Cuba's centralized, Soviet-style economy more efficient and open up opportunities for people. Cuba's budding private sector is the frail backbone of his plan to reinvigorate the country's feeble economy.

People say they have seen small improvements that do not go far enough. Cuba's economy — grappling with the fallout from the global financial crisis and the aftermath of devastating hurricanes in 2008 — appears to be in dire shape. Salaries remain low, food prices are high and housing is scarce. Bartenders, with access to dollars, earn wages many times that of physicians. Many roads in Havana have been repaired. Microwave ovens, DVD players and cellphones are now in stores, but most Cubans cannot afford them.

The nation still imports more than 80 percent of what it consumes, and Mr. Castro is trying to encourage farming by giving fallow land to those willing to work it. But the money they can earn selling the food remains below what is needed for the tools and labor needed to start a farm.

In a speech in April 2011, Mr. Castro, heralding yet another a battery of changes intended to lift the island out of economic despair and stagnant thinking, proposed that politicians be limited to two five-year terms in an effort to rejuvenate a political system dominated by aging loyalists of the revolution. He made even more explicit what most Cubans discuss only behind closed doors and the rest of the world has taken for granted: The Castro era is nearing its end. At the party's first congress in 14 years, the president named a party stalwart and fellow combatant in the revolution, Jose Ramon Machado, 80, to the second-highest position in the Communist Party. He also named several people younger than 70 to the central committee and three to the 15-member politburo, possibly grooming them for bigger roles in the future.

Changing the Economy

When Cuba legalizes the buying and selling of real estate, Cubans expect a cascade of changes: higher prices, mass relocation, property taxes and a flood of money from Cubans in the United States and around the world.

Private property is the nucleus of capitalism, of course, so the plan to legitimize it in a country of slogans like "socialism or death" strikes many Cubans as jaw-dropping. Indeed, most people expect onerous regulations and already, the plan outlined by the state media would suppress the market by limiting Cubans to one home or apartment and requiring full-time residency.

Yet even with some state control, experts say, property sales could transform Cuba more than any of the economic reforms announced thus far by President Castro's government.

The opportunities for profits and loans would be far larger than what Cuba's small businesses offer, experts say, potentially creating the disparities of wealth that have accompanied property ownership in places like Eastern Europe and China. Havana in particular may be in for a move back in time, to when it was a more stratified city.

Broader effects could follow. Sales would encourage much-needed renovation, creating jobs. Banking would expand because, under newly announced rules, payments would come from buyers' accounts. Meanwhile, the government, which owns all property now, would hand over homes and apartments to their occupants in exchange for taxes on sales — impossible in the current swapping market where money passes under the table.

And then there is the role of Cuban emigrants. While the plan seems to prohibit foreign ownership, Cuban-Americans could take advantage of Obama administration rules letting them send as much money as they like to relatives on the island, fueling purchases and giving them a stake in Cuba's economic success.

Relations with the Obama Administration

Many Cubans are putting their hopes for the economy on President Obama's easing of longstanding restrictions on family travel and remittances to Cuba, although the Cuban government charges hefty fees on such remittances. Some people believe Mr. Obama needs to do much more to make a difference.

Instead of lifting the trade embargo with Cuba, enacted in the 1960s in an unsuccessful attempt to force a change in government after Fidel Castro came to power, Mr. Obama is using his executive power to repeal President George W. Bush's tight restrictions and the looser restrictions under President Bill Clinton so that Cuban-Americans can now visit Cuba as frequently as they like and send gifts and as much money as they want, as long as the recipients are not senior government or Communist Party officials.

But the Gross affair cast doubt into the relationship. A contractor for a company financed by the United States Agency for International Development, Mr. Gross was arrested in December 2009. Cuba charged him with crimes against the state for delivering banned equipment as part of a semicovert program aimed at weakening the Cuban government.

The arrest sent a chill through the diplomatic corps of both countries. The Cuban government has complained for years about "democracy programs" it says subvert its authority and sovereignty. Still, American officials said they did not expect a protracted affair.

Stumbles and perceived slights over other joint projects, like a medical clinic in Haiti, deepened the rift.

The island of 11 million people is in the midst of its largest economic overhaul since the end of the Soviet Union — with a major drive toward private enterprise — and many Cuba experts believe that the country's officials are engaged in an ideological war over how far and fast to go.

Relations with the United States appear to have become secondary to domestic concerns, some argue. Or, they say, hard-liners seem to be winning the argument on foreign relations.

 

[The Messiah]

The party maybe named "Socialist Party" but that party's ideology is actually an altogether different.

Yet when it suits the extreme right wingers then same hitler is a socialist because of his party name.

 

[asianobserve]

Yet when it suits the extreme right wingers then same hitler is a socialist because of his party name.

But it does not make those right wing nuts correct about Marx's "Socialism." You could not have picked the dumbest group to base your definition of socialism on. I'm not even sure if those people know were their arse are...

 

[asianobserve]

I remember now there were people here who were trumpeting the success of Cuba? Where there are more doctors than needed? Socialism is the opium of the uneducated and the desperate...

 

[pmaitra]

It did not end well because the American housing bubble's collapse left an enormous void that cannot be filled by tea bags. There's no bubble in Cuba, not yet.

The housing bubble was an artificially created demand for housing that falsely raised the housing prices. Banks were encouraged to give out housing loans to people whom the banks would otherwise not give any loans. This was supported by Congressmen, both Republican and Democrat. This inflated the housing prices and when these borrowers defaulted on their payments, there were foreclosures and banks had to write off many of these loans as "money lost."

Marx may have been wrong about Communism, but he was damn right about Capitalism. This artificial inflation of prices is something that has ruined societies. The irony here is that it was a populist, or perhaps socialist move.

Interesting read: BBC News - A Point of View: The revolution of capitalism

 

[asianobserve]

The housing bubble was an artificially created demand for housing that falsely raised the housing prices. Banks were encouraged to give out housing loans to people whom the banks would otherwise not give any loans. This was supported by Congressmen, both Republican and Democrat. This inflated the housing prices and when these borrowers defaulted on their payments, there were foreclosures and banks had to write off many of these loans as "money lost."

Marx may have been wrong about Communism, but he was damn right about Capitalism. This artificial inflation of prices is something that has ruined societies. The irony here is that it was a populist, or perhaps socialist move.

Interesting read: BBC News - A Point of View: The revolution of capitalism

The much trumpeted excesses (abuses) of Capitalism is nothing compared to the misery of the people in controlled societies (with controlled economies) intended to follow Marx's and Engel's flawed theory. You just make a little bit objective survey of these countries (you know them) and you'll see the light...

Actually, the intention behind the availability of easier credit for housing in the US was to allow more people to be able to afford houses, to encourage housing ownership. This intention was noble however the bubble was an unintended consequence of it. This was made even worse by the creation of funky derivatives based on housing mortgages. The latter is the product of a flawed market idea that should be regulated.