Home > Uncategorized > Graph of the day: unemployment, Cyprus and Iceland

Graph of the day: unemployment, Cyprus and Iceland

April 5, 2013 Leave a comment Go to comments

Two small islands with a large banking sector which went bust (and the real increase of unemployment still has to start, in Cyprus, the increase since 2011 has to do with a housing bust)

Cyprus

  1. Scott Baker
    April 8, 2013 at 7:50 am
    Reply

    “…the increase (in unemployment) has to do with a housing bust.” Yes, it always does in these macro busts, going back hundreds of years. It is a fundamental flaw in capitalism to treat land as if it was capital, when it has almost exactly the opposite characteristics.
    Land is finite. Capital is infinite, within the capacity of labor and resources (aka land, in classical economics)
    Land is made by nature. Capital is made by humans.
    Land typically appreciates (except in Detroit). Capital depreciates through wear and obsolescence.
    Finally, it’s not a “housing bust” it’s a “land bust.” The houses didn’t suddenly become worth less, the land did…followed swiftly by the banks that made the loans, leading to a credit contraction, leading to bank deposit in the case of Cyprus, and coming to America, pending approval of the joint FDIC-BOE scheme from their December paper, of which Cyprus was just a preview.
    Land Value Taxes would be best to curb this.
    State Banks would protect depositors by backstopping small to medium sized banks that don’t securitize their loans.

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