Abstract
Most studies of the subprime crisis have taken into account the significance of the banks in general but not the specifically important role of mortgage loans including the crucial factor of private landed property. Marx's theory on ground rent serves as a key in a deeper understanding of the subprime crisis and in differentiating the class interests. Referring to Marx's theory on ground rent especially the topics of landed property, differential and absolute rent, price of land, mortgage, and fictitious capital, an analysis is given of the consequences of ground rent under monopolist capitalism, in particular on the recent subprime crisis, which has its winners and losers. The article concludes with the bourgeois and the proletarian solution of private landed property.
Highlights
The crisis of 2008–10, called subprime crisis, reached its first culmination point in the USA with the collapse of Lehman Brothers and it became a major crisis worldwide, recalling the historic capitalist depression of 1929–32
Most studies about the crisis have taken into account the significance of the banks in general but not the important role of mortgage loans including the crucial factor of private landed property
We want to analyze the impact of landed property and its claimed right to ground rent on the various classes during the crisis
Summary
Since 1982, a massive import of capital took place to finance the current account deficit of the USA (see Figure 1). In many cases except financial irregularities, the lender and the mortgage broker have no further interaction with the borrower after the loan is made The borrower pays his monthly repayments not to the bank, but via a servicer to the mortgage bank which had issued the bond secured by the mortgage. Mortgage and investment banks created enormous profits (issuing securities, selling brokerage, rating charges, etc.) through which the financial sector as a whole participated (see Figure 3). In this battle over higher profits and market shares among the US investment banks, other banks were involved, for example, Bankers Trust, a subsidiary of Deutsche Bank. Price of landed property is capitalized ground rent
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