At Ordos, China, local officials reportedly have built an entire new city for a million people. But no one can move there, because all the apartments have been bought by speculators so housing is too expensive. Al Jazeera seems to be the only real source for this story, tho brief mentions (omitting speculation) are in the Telegraph and National Post , and of course numerous blogs link to the video.
Category: speculation
Dangers of debt
“Black Swan” author Nassim Taleb at the Royal Society:
Debt is a product of overconfidence. The more confident you are, the less it makes sense to use equity. The problem is that we– humans– cannot be trusted with knowledge because we tend to be overconfident …Religions…don’t like debt. It’s not without a reason. You had debt jubilees, cancellation of debt from Babylonian times… Debt was not necessarily a good thing….Debt is something that’s very toxic and can hit you very quickly, which is why I don’t like leveraged buyouts…so you need to protect people from themselves.
You can express overconfidence with equity, without harming yourself too much…The debt bubble we have now is still here.
He gives some annoyingly persuasive arguments for a conservative approach to public policy. I don’t find any transcript, but there is an mp3 from Radio National, and the Royal Society offers both video and audio. It’s worth listening just to hear him say “Silly Con Valley.”
Speculating in cab medallions
Prices below are medians (2009), and “average” for earlier years.
Month Price Source
October ’09 $185,000 City of Chicago
May ‘09 $170,000 Chicago Dispatcher
April ‘09 $164,500 Chicago Dispatcher
March ‘09 $165,000 Chicago Dispatcher
February ‘09 $158,000 Chicago Dispatcher
Feb ‘07 $ 77,000 Chicago Tribune
2004 >$40,000 Chicago Tribune
1991 $28,000 Chicago Sun Times
The October list includes two sales at $190,000.
As medallion prices rise despite a sagging economy, this seems to me to indicate that fares are already too high and should be reduced, which would allow medallion prices to fall and, in theory, drivers would be unaffected while passengers benefit.
But Chicago Dispatcher publisher George Lutfallah sees it differently. Due to difficult conditions in the taxi industry, individual medallion owners are selling their medallions to big owners– the taxi equivalent of land speculators. Lutfallah sees this as a bad thing, “a taxi driver who owns his or her own cab is more likely to take better care of both the vehicle and the customer.” He therefore recommends a fare increase. (source: print edition of Chicago Dispatcher October ’09)
Land speculation in Khartoum
Georgists will not be surprised that the Sudanese capital of Khartoum suffers from land speculation. A perceptive article in the Sudan Tribune notes that downtown building lots go for $500,000 to $2 million USD. “The rents in Khartoum have also increased due to huge demand from the oil companies and UN agencies…” Another source of speculative increase:
The Bank of Khartoum recently initiated the first mortgage policy in the history of Sudan and they announced that their customers could buy, through the bank’s policy, a house or an apartment and pay in installments over a period of 15 years.
Although he doesn’t draw the direct link between speculation and finance, Ahmed Elzobier’s article notes that “land speculation is, at best, a high-risk, high-return investment. At its worst, it is the playground of scam artists and rife with high-level corruption.”
Henry George’s analysis is brought in thru a Progress Report of Fred Foldvary. However, Elzobier does not mention George’s remedy, the taxation of land value. Instead, he suggests that Mozambique “has the best land policy in Africa. According to the country’s 1997 Land Law, land in Mozambique is still owned by the state and cannot be bought or sold, but the rights of people or communities to use the land, and sell assets on it, are recognized.” Being truly ignorant about Mozambique, I wonder how well this works.
Although the Sudan Tribune site claims to allow comments, I could not figure out how to make this function work, so I cannot comment on the story.
Where Chicago posts medallion sales prices
I have been relying on the estimable Chicago Dispatcher monthly newspaper for Chicago medallion sales prices, because I could never find them on the City’s web site. Now, while trying to figure out something else, I have found the site. The same page with a different url seems to be here. It’s not clear whether this link is permanent, but one can navigate to it from egov.cityofchicago.org using Your Government > City Departments > Business Affairs and Licensing > Public Vehicles > Taxi and Limo Industry > Medallion Owners. The latest list posted, thru June 8, is this pdf, showing that on the last date reported, June 9, ten sales closed at prices ranging from $165,000 to $178,000.
Other medallion-related items: Here’s a post indicating that New York, too, is seeing continuing rise in medallion prices. And Taxi Medallion Systems do not Benefit Drivers.
Chicago medallions rise again.
According to the June issue of Chicago Dispatcher, taxi medallion prices rose again in May, to an average of $170,000. Here’s some context:
Month Price Source
May ’09 $170,000 Chicago Dispatcher
April ’09 $164,500 Chicago Dispatcher
March ’09 $165,000 Chicago Dispatcher
February ’09 $158,000 Chicago Dispatcher
Feb ’07 $ 77,000 Chicago Tribune
2004 >$40,000 Chicago Tribune
1991 $28,000 Chicago Sun Times
(Chicago Dispatcher data are for the period ending on the 23rd of the indicated month).
I find it remarkable that this kind of real estate has continued to gain value, over 7% in 3 months, while most other kinds in Chicago seem to have declined. There was, however, considerable fluctuation recently, with sales in late April running around $145,000, increasing to $175,000 on May 19 and 20. According to ads in the Dispatcher, you can lease your medallion out for $600 to $700 per month, a yield of close to 5% (in addition to any price appreciation which might occur). There is, of course, some risk that the price might depreciate instead.
Wealth stolen thru privilege
We already know this in general, that government-protected privilege is used to steal wealth from the public. An outrageous specific example appears to be Goldman Sachs, as profiled in Rolling Stone by Matt Taibbi. The text seems to be here and a pdf scan here.
Tho especially aided by a revolving door between GS and regulatory agencies, none of this could happen under a government which sought to eliminate privilege where possible and tax it where it cannot be avoided. Taibbi doesn’t seem to be aware of this latter point, or maybe it just isn’t as interesting to focus on policy solutions as to discuss evil persons and their organizations.
A rather weak response from Goldman Sachs is reported here, the good news being that
in the wake of the events of the past year or two, Goldman’s partners have pretty much lost their appetite for going into public service.
But as long as privilege thrives, some will find ways to manipulate it to their advantage.
$300,000 for a Boston parking space
And it really seems to be just a parking space, outdoors, in a neighborhood where condo’s cost millions. If this space, including an allowance for access lanes, is 250 square feet, that works out to about $1200/square foot. More evidence that location matters.
Medallions up another 4% last month
Chicago Dispatcher reports the median sales price of Chicago taxi medallions was $165,000 during the month ending March 23, up from $158,000 the previous month (and $77,000 in February 2007).
What Crash? Cab Medallions STILL rising
Not as fast as previously, but the latest report on Chicago taxi medallions, from Chicago Dispatcher’s March issue, calculates a median price of $158,000. This compares to $155,000 two months earlier. Given the declines in the price of most other privileges over the last several months, this is a surprise, but perhaps the medallion market is slow to react. Or perhaps there are other factors which improve medallion owners’ incomes in an economic recession?
This issue features the headline “Medallions in Jeopardy,” which had me hoping that perhaps this major obstacle to self-employment would be abolished. But no, the article is about a particular case, where City administrators decided to punish the heirs of a deceased medallion owner, for whatever reason, by revoking the medallion on a technicality. Chicago Dispatcher’s publisher, George Lutfallah, who wrote the article, evidently sees the medallions as assets for (some) existing cab drivers and others, rather than a barrier to non-owners struggling for a job.