Now that the immediate problems with the banks look as if they have been solved, is everything going to be all right? None of the commentators seem to agree, so we shall not venture to make predictions. The continuing wild fluctuations on the stock market suggest that nobody has a clear idea about how things will go. What is being done does not sound right but we could be wrong.  We can only wait...

Paul Krugman, New York Times columnist and University of Princeton professor, has been awarded this year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. His speciality is spatial economics, and one might have thought that he would be strong on Ricardo’s Law of Rent and possibly even an advocate of land value taxation. But whilst, unusually amongst economists,...

The present gloomy state of the property market is a good time to take stock and ponder how best to take advantage of the investment opportunities that will start to open up as the cycle bottoms-out before the next upswing.

Western world will become significantly less wealthy – so says the Daily Telegraph economics editor in this article. This is true. But it has not happened yet. Billions dollars and pounds have been lost in paper values, but that is not a loss in wealth. The loss in wealth will occur because land prices had advanced well beyond the actual earning capacity of land, based on the capitalisation...

Confused about what is going on?

Ireland has become the first country in the eurozone to slide into recession as the housing boom turns to slump. The economy shrank by 0.5pc in the second quarter, and 0.3pc in the first quarter. Other EU states to follow include Denmark, already in recession and Sweden, not members of EMU, followed by Italy, Ireland and Spain, which has been in trouble for a while. In Ireland, house prices have...

Butterfly economics An article in today’s Guardian refers to RICS figures which show that house sales have dropped to their lowest level since 1959. In the absence of land value taxation, house prices are sticky downwards, but due to the interaction of the banking system and the land market, they always overshoot when the trend is rising. This drives the boom-bust cycle. When the country’s...

David Blanchflower of the Bank of England’s Monetary Policy Committee has repeatedly argued for a cut of interest rates to fend off mass unemployment. But the underlying assumptions are wrong because they are based on defective economic theory. It is not possible to get an economy to function properly just by adjusting interest rates. A low interest rate will cause a fall in the value of the...

Stock markets bounced back on Friday with record rises following the US “rescue plan”, which involves the government taking on the mass of bad debt, backed by “assets” – in reality, land, that is worth substantially less that the money advanced in loans. We said then that the Paulson scheme did not sound convincing and predicted that the enthusiasm was likely to be...

Having been out of the UK for several months, I have had an opportunity to get a sense of what the politics of the country is, viewed from the outside. It does not look good. The economy of the UK is undoubtedly in a bad way, but neither politicians nor economics commentators seem to have much idea about what is going on. William Keegan and Will Hutton, who write for the Observer, are ureconstructed...