Minutes of Democafe meeting, Saturday 15th August 2015 held from 2pm to 4pm at The Forge, Delancey Street, Camden NW1 7NL

Present:  Eddie (chair), James Carol, Sara, Janos, Alan, Clive, Trevor, Mary (notes), Apologies: Michael, Denise.  

The last minuted meeting: was   Sat 1st August 2015. Eddie also reported on last week’s meeting held during the Dumm Weekend held at G511ERY, 7 Sisters Road. Dumbness, stupidity and dumbing down were explored over the weekend.

HOUSING:  Alan reported briefly on a two-week hearing he has attended about a proposed new development at Swiss Cottage which is an 24 storey high rise. Out of 1501 responses to the proposal only one was in favour, the other 1500 were against including Alan’s input.  The decision has been left with the Inspector of Planning Graham Dudley. For details see: http://100avenueroad.com.

It was also agreed at last week’s meeting to return to the question of looking at what percentage of jobs are connected to the current housing market that we are all critical of? And in this Clive Menzies of free Critical Thinking had kindly agreed to come and talk about his experience working in the city when the sub-prime Mortgage Crisis occurred in 2007/2008.

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Main presentation by Clive Menzies on Housing & the Monetary System:
Everyone involved in the subprime market was incentivised to commit fraud and cover it up. Clive talking about junk bonds sold  by Michael Milken in the 1980s – they say that crises happen with every new generation of accountants (c.30 years), once those who remember the last crisis have retired. Clive joined in a new company in 2007 marketing investment funds to professional managers; business going well until August 2008 when activity ground to a halt. The whole business became dormant, and he started investigating the sub-prime crisis – sub-prime mortages were a huge market.

Huge numbers of people were involved and they were all incentivised to commit fraud and hide the truth: people being sold mortgages for houses they couldn’t afford, the realtors (estate agents) were incentivised to sell the property at the highest possible price and encouraged the purchasers to fraudulently exaggerate their income, then the mortgage lenders didn’t know the borrowers and were not bothered whether they could afford the repayments or not, they were going to pass the mortgages on to the issuing banks (Lehman Brothers, Goldman Sachs, etc.) and weren’t accountable for non-repayment. The issuing banks employed graduate mathematicians to “prove” that combining, mixing up, slicing and dicing this toxic debt into baskets of securities, minimised the risks of default – nonsense.

Credit Rating Agencies came into being to do “due diligence” on particular types of bonds on behalf of investors.  In the 1970s their business model changed when the issuing banks began paying the Credit Rating Agencies, so their interests became aligned. Standard & Poors, Moody’s, etc, – turnover quadrupled in 6 years, all due to the sub-prime mortgage securities. Evidence has emerged that staff doing the rating were told to rate this toxic debt as AAA (like prime government debt) irrespective of whether they had any information on the underlying mortgages and borrowers.  All parties were therefore incentivised to lie.

Investment managers, who were looking after Pension Funds, had to justify to their trustees why their performance was lower than the average, e.g. government stock produced 5%, whereas the sub-prime junk was making 8%.  Because the pensions industry is highly competitive, they were incentivised to buy the junk bonds rather than AAA government debt or they would lose their clients and their jobs. Then there were all the journalists, who were writing about the wonderful magic performanced by these new graduates; they were also incentivised to tell the “good news”, nobody is incentivised to tell the truth, that the system has broken. Publicly, practitioners present a positive view of the economy and investment. Privately, some will acknowledge the system is broken. In this country 80% of the UK bank lending is property/mortage related.

So in conclusion we’ve been here before, and the system does not acknowledge that it doesn’t work.  For example, the currency war with China, their currency the yuan has been appreciating steadily while US dollars are being issued by the Federal Reserve in huge amounts.  There is no solution within the present system other than printing money which will eventually come to grief.  The housing market is one facet of the Ponzi scheme that is our economy.

The Great American Bubble Machine, by Matt Taibbi, describes Goldman Sachs’s method of creating bubbles, crashing the economy, then buying up all the real assets, land etc. – it’s all privatised.  In Critical Thinking they have identified three fundamental flaws in the economic system: Minority control of Land, Resources & The Commons, denying the rest of us the means to life, and the third factor is interest on money.

Ha Joon Chang “23 Things They Don’t Tell You About Capitalism” exposes many of the myths/lies such as “trickle down” and so called “free trade”. Institutionalised hierarchy created the political and economic system but self-organisation is ideally suited to complex tasks/systems.  This is explored by Frederic Laloux in his book (and video) Reinventing Organisations.  Rather than allowing banks to create money from nothing and charge us for using it, the UK government could create its own debt and interest free money.

It’s been done before: the Guernsey pound: http://www.michaeljournal.org/guernsey.htm. What the Euro has done is to allow Germany to benefit from the selling BMWs, Mercedes, Audis etc. in an undervalued currency to poorer countries, like Greece, Spain, Portugal & Italy who were buying them in an overvalued Euro relative to their own economies.The European Union is a stepping stone to a One World Government.  World domination/oppression was carried out initially by the British Empire, currently the US, soon to be China, they are all part of the system.

The basis of the economy should be sharing the value of land, resources and other commons to fund the running costs of the public services and an unconditional citizens dividend.  If we had a citizens income (or dividend) it eliminates the need for unions, unemployment benefit, pensions etc. Public revenue could provide free public transport – much of the current cost is related to ticketing and fare collection – previous studies showed that free transport would reduce the subsidy from the public purse.  Currency could be referenced/backed by land and the surplus value shared or taxed.  Other currencies could operate independently as tax avoidance would no longer be an issue.

People have been conditioned to believe that competition is the way to success.  Anthropological evidence shows we are much more productive when we co-operate on a non-hierarchical basis.  Families and communities have been atomised, we need to get back to smaller cellular organisations to which we can relate.  Guy Standing’s Basic Income pilot in India produced stunning improvements in health, social and economic indicators.

Clive also made reference to Margaret Kennedy, who identified interest as the key component of our system that needs to change: 
http://freecriticalthinking.org/daily-pickings/1024-interest-redistributes-rather-than-creates-wealth. 
Also Bernard Liaeter’s work on currencies: http://www.lietaer.com, who recommends a whole variety of complementary currencies, working alongside a currency based on a basket of commodities, the terra, advice apparently given to Greece in 2012.

Research on 43,060 companies 40% controlled by 147 corporations and 60% of their revenues shows how wealth and power are concentrated in few hands. Statistics on MPs involvement in housing – most are owner-occupiers, some 70 are buy-to-let landlords. Former Thatcher minister Ian Gow sold off council housing – his millionaire son is now a buy-to-let landlord – Charles Gow owns 40 former council houses. Over 40% of Council Houses that have been sold are now “Buy-to-Lets”.

Clive also recommended the following TED Talk:
Healthcare: humanity above bureaucracy | Jos de Blok | TEDxGeneva –
https://www.youtube.com/watch?v=SSoWtXvqsgg, also “Boozing with Ben”: https://wikispooks.com/wiki/Document:Boozing_with_Ben,
and Gilad Atzmon presentation on “The Cognitive Elite of Jewish History”: https://www.youtube.com/watch?v=7hWl8jq4zLI#t=520

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Eddie concluded by suggesting that as a group Democafe could decide how best they could contribute to the study and investigation of the current housing crisis. He felt rather than attempting to come up with solutions at this stage perhaps the best thing to do  would be to start compiling local stories/experiences related to the current housing situation. In order to make an information/study tool that the public could access easily through the Democafe website – to be discussed.

EF/CM/mf