RIGHT ALL ALONG Edn 4

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I have lost count of the number of times that I have been right when policy-makers got it wrong - and the number of times they have ignored my advice and pleas. Currently they are ignoring my advice on managing Sovereign Debt.

• There was the time in 1975 when I wrote to The Times, 11th April 1975 forecasting a possible disaster if the present Housing Finance System was not changed and begging for funds to finish my researches.

I will launch the world's first SAFE Lending and savings System in 2012.

• There was the time in the 1980s when I paid a visit to the Treasury to tell the Chief Secretary in person at his office that inflation in the UK was about to take off. He denied that. A few weeks later it did.

• There was the time of the oil price crash in the 1980s. My office was filled with salesmen telling me that economists forecast a boom. There was a slowdown as I had said to then was quite possible.

• There was the review of my alternative lending system in the International Union for Housing Finance Newsletter November 2004. The industry told me that it was outdated and not needed. Then there was the crash in 2008. The review in January 2005 on the Shelf Life page of the Mortgage Finance Gazettes fared no better. In  fact the comment was that it looked like a high start loans which would limit loan sizes.

The crash, when it came, was hardly surprising - not because of sub-prime...not at all. That made it worse. Regulators failed to stop lenders from lending 12% more every time interest rates fell by 1% below the 7% mid-cycle interest rate. High start was the defense that was needed but not applied.

How high? Academics thought the mid-cycle rate was lower than it was. I did not. I was spot on.

• So rather than admitting their mistake, the regulators imposed BASEL III. BASEL III is needed because the regulators have not admitted their error. They are still permitting lenders to lend too much and when interest rates are due to rise again they will face a dilemma. I don't know which option they will choose but there won't be a good option.

• In 2007,8,9, rather than look at my new ILS System for SAFE lending, following hundreds of phone calls and emails, the regulators, the USA Treasury, the Bank of England, the IMF, the Federal Reserve all looked elsewhere. I have and I had top class credentials and backers including a letter written by an Actuarial Analyst and sent to the USA Treasury telling them so and that is why we had the banking crisis. 

My rescue plan: simply by allowing mortgage payments to rise at the SAME rate as average incomes were rising, even the most of the biggest mortgages could have been saved in 2008. And the banking industry, the economy, jobs, and trillions of dollars of world economic output would have been saved. But they all refused to listen.

WHAT THEY ARE STILL IGNORING

FIRSTLY

• There is the problem with over-sized mortgages - they are difficult to save no matter what you do.

AND THEY ARE STILL ON OFFER

Hence BASEL III

SECONDLY the Sovereign Debt issue:

• We now have austerity measures in Europe (and in TEA PARTY America). Austerity will ensure that the crisis continues...and maybe deepens. Just recently, long after I first wrote about all this in these web pages, the IMF admitted that such actions make borrowing more difficult. Quite so - it reduces the income needed to service the debts, never mind repaying them. Repay when you have spare income guys - isn't that the norm when you start a new company? How is this different?

Rather than pursuing austerity measures Europe should be looking here at my  Sister Blog, (derived from the PRINCIPLES pages - three pages).

If the right wealth and Debt Structures are in place (which they are not and which can be put in place without half the struggles now going on) it is relatively safe to continue stimulating an economy by whatever means. Wealth will not be at risk, budgets will be protected. Any inflation of incomes that is caused can be managed. The value of money is less important than getting the economy re-balanced as long as our wealth and our budgets are safeguarded..READ CAREFULLY - it is all new science but it is absolutely right.

The PRINCIPLES pages deal with the risk of the unknown - and there are far fewer unknowns with this remedy than what is going on right now. Just follow through the obvious knock-on effects of doing as we do now, then ask if we really want those effects....

GREECE
As for Greece - at 2% of the European GDP Greece, has too small an economy for Europe to bring the whole house down in an obstinate refusal by Europe to bail them out with tax payers' money. They let them into the EU, so they should pay the price for their mistake just like any company that takes over another that has hidden flaws. And give them time to sort themselves out. Not set light to a world-wide social revolution - that is where it is taking us all.

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