Chris Cook of OpenCapital.net put together a very insightful presentation on how to stop the real estate crisis by switching from our secured debt-based housing financing to a new form of equity-based housing partnerships. If I understood his comment correctly, his point is that 70% of our money is secured on assets and this is the big problem right now (we can deal with the unsecured debt later used in our economy, which could be replaced by a community currency).
His solution, as I understood is, is to break the vicious circle of owners/developers having to sell properties at fire sale prices because they can’t pay back their debt. It consists in:
- placing the house(s) in a pool
- renting them at a low price to occupier(s), based on a highly-reputable rental index
- having them managed by a manager paid as a % of the rentals
Then the magic happens as follows:
- New investors interested in steady highly predictable revenues (ex. pension funds) buy shares in the pool
- the proceeds are used to pay bank distressed owners/developers, who can pay back distressed banks
- occupiers can pay more than their rent and automatically become investors
- as they become occupier-investors, they have incentive to invest sweat equity in maintaining homes
- they may end up paying their own rent from the rental they get as shareholders, thus breaking the slavery of debt
This equity model is different from a corporation since there is no debt/leverage that would maximize temporarily the management fees by increasing and underestimated risk, which ends up in bankruptcy when default happens. It is similar to a Royalty Trust used for oil production.
Here is the complete presentation:
That is an excellent summary of my proposal in relation to Unitisation of land rental values..
The effect is essentially to reinvent “equity” through the use of a “partnership-based” protocol or framework, as opposed to the conventional Company enterprise model with its in-built conflicts.
I would add that it is also possible to “unitise” energy, and indeed it is here that I see the potential for an “Energy Dollar” with global application. Land rental value Units would tend to have domestic application, since they are redeemable only geographically.
I recently made two presentations in relation to energy unitisation.
The first
http://www.slideshare.net/ChrisJCook/introducin…
was at a major Oil Refining conference in Tehran, and it went down so well that I subsequently met ministers, senior parliamentarians, heads of state corporations, and so on – even a leading cleric in Qom, who considered that the Islamic soundness of the concept is self evident.
As a result I have been asked to put forward my suggestions in relation to the architecture of a new global market in gas – Iran being the proponents of the current Gas OPEC initiative alongide Qatar and Russia, who between the three of them own 60% of global gas reserves….
The second – to a group of engineers specialising in reneableenerg matters – puts the first (carbon-based proposal) into context
http://www.slideshare.net/ChrisJCook/financing-…
I am proposing the monetisation of energy – through Unitisation into Units redeemable in energy – within the framework of a networked “International Clearing Union” .
The beauty about monetising renewable energy and energy savings, is that you are able to exchange for value NOW something that will cost you nothing to redeem in the future. So a wind turbine may typically be funded simply by unitising and “selling forward” a part of its “Pool” of future production. Te reset – after a share paid to an “Operating member” should IMHO rightly accrue to Communities, not private developers, although there is scope for developers also to be partners.
Implicit in the architecture I advocate is a levy on the use of “Commons” – so that a payment for the use of carbon energy would be collected and “Pooled” into a fund which is then invested in renewables and energy savings.
Unlike a carbon tax, which disappears into the maw of the government, and may or may not be invested in renewables etc, such levies would – through the use of an equal “Energy Dividend” of the Pool Units – give rise to a “return on investment” consisting of Units with an intrinsic value in exchange – unlike the complete balderdash of current “deficit-based” carbon trading – like emissions trading and carbon credits, which are f”iat” currencies brought to us by the same people who brought us the Credit Crunch.
Best Regards
Chris Cook
Guillaume, thanks a lot for this post on Chris Cook's proposal. I met Chris during BarCampBankLondon (June '08) and was very interested by his work on peak credit.
For french readers : I started to translate Chris contribution to the Asian Times http://www.atimes.com/atimes/Global_Economy/JD0…. If you want to help me into improving the translation, please go and visit the French BarCampBank wiki: http://moourl.com/pmqa5
That is an excellent summary of my proposal in relation to Unitisation of land rental values..
The effect is essentially to reinvent “equity” through the use of a “partnership-based” protocol or framework, as opposed to the conventional Company enterprise model with its in-built conflicts.
I would add that it is also possible to “unitise” energy, and indeed it is here that I see the potential for an “Energy Dollar” with global application. Land rental value Units would tend to have domestic application, since they are redeemable only geographically.
I recently made two presentations in relation to energy unitisation.
The first
http://www.slideshare.net/ChrisJCook/introducin…
was at a major Oil Refining conference in Tehran, and it went down so well that I subsequently met ministers, senior parliamentarians, heads of state corporations, and so on – even a leading cleric in Qom, who considered that the Islamic soundness of the concept is self evident.
As a result I have been asked to put forward my suggestions in relation to the architecture of a new global market in gas – Iran being the proponents of the current Gas OPEC initiative alongide Qatar and Russia, who between the three of them own 60% of global gas reserves….
The second – to a group of engineers specialising in reneableenerg matters – puts the first (carbon-based proposal) into context
http://www.slideshare.net/ChrisJCook/financing-…
I am proposing the monetisation of energy – through Unitisation into Units redeemable in energy – within the framework of a networked “International Clearing Union” .
The beauty about monetising renewable energy and energy savings, is that you are able to exchange for value NOW something that will cost you nothing to redeem in the future. So a wind turbine may typically be funded simply by unitising and “selling forward” a part of its “Pool” of future production. Te reset – after a share paid to an “Operating member” should IMHO rightly accrue to Communities, not private developers, although there is scope for developers also to be partners.
Implicit in the architecture I advocate is a levy on the use of “Commons” – so that a payment for the use of carbon energy would be collected and “Pooled” into a fund which is then invested in renewables and energy savings.
Unlike a carbon tax, which disappears into the maw of the government, and may or may not be invested in renewables etc, such levies would – through the use of an equal “Energy Dividend” of the Pool Units – give rise to a “return on investment” consisting of Units with an intrinsic value in exchange – unlike the complete balderdash of current “deficit-based” carbon trading – like emissions trading and carbon credits, which are f”iat” currencies brought to us by the same people who brought us the Credit Crunch.
Best Regards
Chris Cook
Guillaume, thanks a lot for this post on Chris Cook's proposal. I met Chris during BarCampBankLondon (June '08) and was very interested by his work on peak credit.
For french readers : I started to translate Chris contribution to the Asian Times http://www.atimes.com/atimes/Global_Economy/JD0…. If you want to help me into improving the translation, please go and visit the French BarCampBank wiki: http://moourl.com/pmqa5