Dual‐indexed mortgages in reforming socialist economies: Evaluating the risks and institutional requirements

Abstract

Although housing finance systems in reforming socialist economies have attempted to increase their market orientation, the high inflation rates accompanying the reform process have introduced new distortions. Mortgage instruments designed for high‐inflation economies, such as the dual‐indexed mortgage (DIM), can reduce these distortions. However, the introduction of new financial instruments should not be undertaken lightly. Both the performance of the instruments under various macroeconomic conditions and the technical requirements for implementation must be examined carefully.

Such an analysis was performed for the hypothetical introduction of a DIM in Hungary. In the Hungarian example, the risks of losses on a DIM portfolio are minimal and are considerably less than the risk faced by traditional fixed‐rate mortgages. An examination of the institutional and technical issues associated with the DIM shows that reforming socialist economies face special difficulties. In the Hungarian case, as the structure of the economy changes, the accuracy of traditional methodologies for gathering government statistics, and therefore the accuracy of the indices, declines. Lenders have delayed implementation of the instrument for this reason. Lenders in other reforming socialist economies should take such risks into account and should, at the very least, adjust their underwriting standards to account for such risks. In the long run, reconstruction of the government statistical system should alleviate this problem.     

“Keep Government Out of Business”: Bank Nationalisation,Financial Reform and The Private Trading Banks In The 1930s

During the early 1930s the private trading banks came under sustained attack from sections of the Australian Labor Party and the Country Party, and from supporters of Major C.H. Douglas. Repeated calls for bank nationalisation or “socialisation of credit” or “social credit” heightened tensions within the banks and conservative political circles. In response, the banks secretly funded a nationwide campaign in support of the Lyons government in the lead‐up to the 1934 federal election. While the campaign was successful, the outcome resulted in the establishment of a Royal Commission to investigate the banking sector. The Royal Commission's recommendations and the Lyons government's proposed banking legislation were about providing greater government control of the sector. Opposition from the Bank of New South Wales and its supporters during the late 1930s helped forestall the legislation. The onset of war and, in 1941, initiatives from the federal Curtin Labor government and the National Security (Wartime Banking Control) Regulations ended what was a decade‐long struggle waged by the trading banks against greater government control of the banking sector.     

Constitution, Court, Indian Tribes

We claim that the "constitution, and the laws of the United States which shall be made in pursuance thereof… shall be the supreme law of the land." But we also claim to recognize the sovereignty of Native American nations, the original occupants of the land. These claims—one to jurisdictional monopoly, the other to jurisdictional mu1tiplicity—are irreconcilable. Two hundred years have produced no resolution of the contradiction except at the expense of the tribes and the loss to non-Indians of the Indians' gift of their diflerence. This article explores the bear- ing of American constitutional law upon Native American tribes.