Felipe Rezende — Banks, Capital Markets, and Institutional Investors as Providers of Long-Term Finance

This is the second in a series of blog posts on financing infrastructure assets.

Multiplier Effect
Banks, Capital Markets, and Institutional Investors as Providers of Long-Term Finance

Felipe Rezende | Director, Economics and Finance Program, Bard College and Research Fellow, The Levy Economics Institute

Izabella Kaminska — Property bubbles and ghost cities

I have a working theory about the premium property bubble in capital cities like London. There’ll be a post about it on AV soon. (Have been a little under the weather so it’s taken a while.)
In a nutshell, the idea is that the economy is plagued by a glut of misvalued capital — which is seeking preservation for as long as possible and at all costs. The preservation is not really about the dollar sum of that capital, but about preserving the position on the social hierarchy ladder that it provides for....


But, as per my German sun lounger analogy, owners of abstracted financial capital have lost perspective on what their capital rights represents. They wish to preserve not the wealth provided for by the means of production, but the superior social position that this used to entitle them to.
The truth, however, is that they are no longer entitled to that. Also, what they misunderstand is that they are no less well off as a result of losing that claim. It’s everyone else who is elevating to their wealth.
Nevertheless the search for the preservation of their past superiority continues — the days when they were adding social value — continues.
Consequently this capital flitters from one idle asset class to the next, avoiding at any cost an opportunity to invest in something productive — out of fear this might expose them to the sort of risk that might lose them their superiority claims forever. It’s worth noting that the constant speculative flittering is damaging in its own right.

Dizzynomics
Property bubbles and ghost cities
Izabella Kaminska

In a healthy capitalism, the purpose of real capital is production for consumption and financial capital is for further capital formation from gains from production, that is, for productive investment. When financial capital is accumulated as financial wealth for it own sake, neither for consumption not productive investment, rentierism and power, then capitalism becomes dysfunctional.

Michael Lind — How to Defeat Useless Rich Moochers

In two previous columns, I argued that left and right alike are confused by a failure to distinguish productive businesses that sell innovative goods and services from “rentier” interests — landlords, lenders, copyright holders and others — which use their natural or artificial monopoly power to extract excessive tolls, fees and other recurrent payments from the rest of society, including productive businesses. The fees or rents extracted by these interests constitute a kind of “private taxation” which — rather than public taxation — is the greatest threat facing America’s productive economy.

Today America’s powerful rentier interests, particularly those in the FIRE (finance, insurance and real estate) sector, are mobilizing campaign contributions and paid propaganda to promote what I called the Rentier Agenda: low taxes on those whose income is derived from capital gains; the privatization of public infrastructure and the deregulation of regulated private utilities, to generate windfall profits for investors in privatized or deregulated agencies; and a macroeconomic policy that serves the interests of creditors, at the expense of slow growth and mass unemployment, rather than productive businesses and workers. Similar observations have been made by many on the left and some mavericks on the right.

To counter the domination of America’s rentier oligarchs, we need an Anti-Rentier campaign that would unite unlikely groups: owners of productive businesses as well as workers, populist conservatives and liberal reformers. An Anti-Rentier movement would distinguish businesses that make profits by providing worthwhile goods or services in innovative ways from rentier interests that passively extract exorbitant tolls and fees from the economy without adding any value.

AlterNet
How to Defeat Useless Rich Moochers
Michael Lind | Salon

(h/t John Zelnicker via email)

Otaviano Canuto — Currency War and Peace

WASHINGTON, DC - Much of the hype surrounding last month's meeting in Moscow of G-20 finance ministers and central bankers was dedicated to so-called "currency wars," which some developing-country officials have accused advanced countries of waging by pursuing unconventional monetary policies. But another crucial issue - that of long-term investment financing - was largely neglected, even though the endgame for unconventional monetary policy will require the revitalization or creation of new long-term assets and liabilities in the global economy....

... global leaders should work to maximize the liquidity that unconventional policy measures have generated, and to use it to support investment in long-term productive assets.

Caijing
Currency War and Peace
Otaviano Canuto | Vice President for Poverty Reduction and Economic Management at the World Bank