found to bail out the banks….It is not being borrowed on the markets, as you say, nor has it been raised from taxpayers. The BoE is having some

difficulty, as I understand it, to explain its origins.

I am hoping to set up a campaign to ‘save homes/job/pensions’…and this proposal

will be one of the solutions to the chaotic de-leveraging now taking place in the housing market. Ann

Yes, it is

the ‘capital’ that should be reduced, which would result in reduced repayments. It should be a downward-only process until a stable and sensible

level of house prices is reached. Then other measures such as the German system mentioned by Ann could take over.

The only practical

approach would be for the price-related reduction to apply to all outstanding mortgages. The ‘unfairness’ issues referred to by Shaw are as nothing

compared to the unfairness of bankers’ remuneration or their exploitation of competitive house-price rises. As Shaw points out this measure does

not help the poorest sectors with no mortgage. But it is part of the approach to more fundamental reform.

Shaw mentions the parallel with

shareholding. I find it incomprehensible that we allow shareholders, with no relationship to an enterprise other than using their holding for

gambling purposes, to, in effect, own the enterprise. Enterprise has become ‘a bubble on a whirlpool of speculation’ (Keynes).

The real

crises today are global warming, oil peak, exhaustion of resources and destruction of species and biodiversity. These are all driven by a growth

economy. The present crisis gives us the opportunity to move to stability, which cannot be based on bank account money created through loans that

attract interest – an economy that, by definition, grows.

The government should acknowledge that the £500bn it will inject into the banking

system is official money, like the coins and notes it prints. It is not taxpayers’ money and there is no need for it to be borrowed on the market.

It is simply created by government. It will remedy a shortage of bank account money so will not be a cause of inflation. This is how money should

come into being; and it should be a criminal offence for anyone other than the state to print money, whether criminals forging banknotes or banks

creating it on computers. The banks’ role should be restricted to operating the money transfer system and making savers’ deposits available to

borrowers.

Official money of this sort can be spent into circulation by the government, it does not put people into debt and it does not

attract interest, therefore it allows for a stable or even a reducing economy.

follows that the “capital” to repay varies with the current price too, right? Otherwise it would take longer and longer to repay the entire loan.

Some problems/questions:

* Wouldn’t the reverse also be true? When house prices rise, wouldn’t that mean that the debt repayments

(and “capital” or loan value) go up? This might not be too popular. It would make it possible to buy at a reasonable price and then get “pushed

out” of the market by speculators!!

* How will this affect the current price of houses?

* How could this be introduced now. What

about those who already sold for a loss? What about those who bought in 10 years ago and have already a managable mortgage – should they be given

an even more managable one? Perhaps those who bought 10 years ago would be given a less manageable debt repayment (as the current price would still

be above what they paid).

* What about those who have already paid off their home? They will miss out on rewards of your proposal..

*

What about those who didn’t buy into the boom and saved … they don’t seem to benefit from your proposal.

* Why should there be a special

rule for houses? What about other assets like shares? You can ask all the same questions about that.

Please remember that we are not _all_

debtors. There’s the poor, pensioners/retirees and savers.

We want to be able to pay a fair price for a house and not be routed by high

debt repayments. We do not want to reward the fools at the expense of the prudent.