Written in 2010, by James Armstrong, Dorchster
Contact: james36armstrong@hotmail.com

reC.A.P., – TO  CAP IT OR SCRAP IT?
 
 
The Common Agricultural Policy costs U.K. taxpayers some £3.8bn per annum.
It does not benefit ‘small’ farmers nor agricultural workers 
It is a serious threat to democracy and welfare. It should be scrapped .  The least we can do is to cap  the expenditure at a means tested amount equivalent to claimants receiving  £12,344 per annum  – the minimum wage.
 
For an every-day example by which to judge the purchasing power of £1billion we can use the cost of the 12 new detached houses with garages built by a team of self builders in St Minver Cornwall and completed in 2008.  for a cost of  some £80,000 each.
£1million would buy twelve and a half such houses and £1 billion some 12,500 so £3.8billion would fund  the building of 47,500 new houses.  
 T his gives a measure of the annual cost of CAP. Payments to   UK taxpayers in money expended and benefit forgone. .
 
The origin of CAP. (Ritson and Harvey)
The European Union was to be a means of political unification and a guarantee for peace following the resolution of the world war.
(during the  in negotiations leading to the Treaty of Rome 1958) the attitude of  the French government and the French farm lobby  were of crucial significance in the establishment of the C.A,P.   just as Germany played a   leading role in directing the industrial policy.
 
The Treaty of Rome set the agenda for  the C.A,.P..
The Treaty  talks of,
“a fair standard of living for the agricultural  community  in particular  increasing the  earnings of persons engaged in agriculture.” 
 
The background to UK agriculture
The C.A.P. effectively transferred  money from industrial workers  (mostly  Germans )  via taxes  to fund C.A,P. payments to farmers (mostly French) . When Britain joined in 1973 owing to the nature of landownership in UK , CAP payments in large tranches were received by the very  small constituency which is the British Landowning group- some
One  per cent of the population.  The historical tendency in UK has been for farms to amalgamate by  enclosure, by  engrossment and by industiralisation  of farming techniques.by emparkment etc.
 
The Underlying principle of CAP
It was established when CAP came into being that producers  should receive a price determined by market forces   but that these market forces should be controlled so that prices fluctuated only between pre-determined upper and lower limits.  So that farmers were protected from excessively low and consumers from excessively high prices. The most basic CAP support scheme is for cereals .   All others a re a variation of this.
 
 
The second major component of the cereals regime is the import controls since world prices are often lower than EU prices.  I t would be worthwhile in the absence of controls to import, so imports are controlled by licence  and import duty must be paid.
 
 
AGRICULTURAL PRODUCTS PRICES IN E.C. AS % OF WORLD PRICES (=100%)
                         E.C.,1994%      highest%
Common wheat         155             155
Maize                         140             211
Barley                         214            218
Rice                            209             209
White sugar                106             137
Milk                            241             259
Beef / veal                   208             208
Pig meat                      130             134
Poultry                         118             161
Sheep meat                  156             243
 
Who receives CAP payments?
The client group is heterogeneous including landowners, food manufacturers, agribusinesses , pheasant breeders,  racing stables , farmers, pony paddock owners, donkey sanctuaries, racehorse trainers’ gallops, wildlife trusts, fishing clubs ,etc
 
 
 
 
 
THE ECONOMIC AND SOCIAL EFFECT OF C.A.P.
The Benefits and cost of CAP versus free trade (Ritson & Harvey p 165)
 
                          Billion ECU ( U.K. ) 1994
                                                                            Interpretation ?
Producers gain                 3.82          (CAP payments received by ‘farmers’
Users cost                         4.31          (cheaper food prices foregone by consumers)
Taxpayers cost                 2.51          ( UK contribution to EU to fund CAP payments )
Net Welfare cost              3.01           ( CAP on balance is a cost not a benefit)
Bridge Trade Effect        -3.31           ( an allowance for the distortion of free trade)
                                      
Analysis
 
In the  following analysis The figures are taken and processed from the information available on the web site
www.cap-payments.defra. gov.uk
 
 
. 
Reducing the annual CAP payouts
For comparison ,the statutory  minimum wage    at £5.93per hour yields £12,334 p a for a 40 hour 52 week year
Using this as a guide  between ‘low’ and ‘high’ C.A.P-income receivers the following analysis emerges for the year 2009 .
At present (2009) 197,346 claimants receive  a total of   £3,426,076,230 costs push this up to £3.8bn) 
The high  claimants
65,991 receive   greater than   £12,334, – in total  £2,993,905,590 average £45,468
If they were ineligible ( cut off point at £12,334, ) the savings would be £2,993,905,590
If they received the  minimum wage equivalent, they would receive  £813,932,994, saving £2,179,972,596  (some £2.2bn)
The low  claimants
At present (2009) 131,427 receive  less than  £12,334,  in total  £434,158,342 , average  £3,303
 
CAP reserved for those now claiming £12,334 or less 
If all now receiving  less CAP than the minimum wage were upgraded to the min wage
And those claiming above this sum were ineligible the cost would be £1,621,020,618
And the savings £1,805,055,612
 
CAP as a fixed payment to all qualifying claimants . large and small.
If the statutory payment was  the minimum wage equivalent
For 197,346 receiving  £12,334 the cost would be £2,434,065,564,saving £992,010,666
 
THE MACRO ECONOMIC EFFECTS OF C.A.P. ON LAND VALUES
Ritson and Harvey write,
“The Producers’ gain is a measure of the economic rent earned by factors engaged in agriculture over and above that which could be earned in the  absence of the policy intervention.
In the case where all the factors and inputs except land are available to agriculture in perfect elasticity of supply (that is the prices and returns of these factors and inputs do not change whatever the  agricultural output  and use levels) theory suggests that all of the policy benefits will accumulate to rents and agricultural values of land .
So the figure is a measure of the annual gain to landowners .
In practice the assumption of perfect elasticity of supply is extreme. Some fraction  of the gain would be expected to accrue to owners of other factors specifically associated with the industry including those upstream of the farm gate”
R and H seem to mean that CAP payments cause land values to rise. 
 A marked increase in the price of agricultural land has been noticeable  since the introduction of CAP, resulting from feeding in £billion  CAP grants each year over thirty three years. .  
 
 
 
 
 
WHO RECEIVES C.A.P.PAYMENTS ?
.
 
annual payments go to –
     Lord Carrington          £149,000
     Lord Linlithgow          £ 144,000
      Lord Rothermere        £29,000
 to-    M.P.s  ,    Richard Drax ,M.P.,  £417,846
To dukes….to earls…. To Prince Charles £581,000
To their  trade association , NFU, £70,000
 
HM Queen received  £1,183,508 over the last two years for privately owning the Sandrigham estate.
Two thousand get more than the Prime Minister’s annual salary,
The regime is not designed to  benefit struggling ‘small’ farmers since the majority of funds go to large agricultural holdings.  Large plc corporations receive £multimillion payments 
It has nothing to do with food security – Owners of one million pony paddock acres  qualify for some £30million.  Preserving the countryside and the wildlife  is the business of Defra and  the RSPB-not CAP –  (yet that Charity with a £15million membership fund gets an additional £1million from CAP annually).
 
Thousands of  claimants are already landowning millionaires
.
WHO PAYS – HOW MUCH- WHO GETS WHAT- WHY?
CAP  is not funded  by EU but out of UK taxes and costs the British taxpayer £3.8 to £4billion in 2009.
This is an increase of  23 per cent over 2008  and in 2010 will increase again, and in 2011
Some 80% of UK citizens live in urban settings. Some 99% of UK citizens own no bulk land and do not qualify for CAP payments.  
From their taxes, moistly income tax, these non qualifiers  fund CAP.
and this is largely unknown to them.
CAP is not rational.
CAP does not fulfil the rationale of the Treaty of Rome,  In UK  the number employed in agriculture has fallen by 1million  and agricultural workers are amongst the lowest paid in the land.  Those farmers on the lowest incomes receive the least benefit from CAP and the increase in incomes of large corporate  farms threatens their existence from buy outs.
The increase in land values proves a barrier to  new entrants to farming.
 
In the past CAP has caused overproduction and waste of food.
Food prices within the EU are  higher than world prices. CAP related EU  Tariffs are a barrier to  exports from third world countries.
EU exports of foodstuffs at subsidised prices threaten the livelihoods of third world producers.   
 
 
CAP  IS ANTI DEMOCRATIC
Access to the orginators of CAP policy is severely restricted and they are not democratically accountable.
 
CAP budget is set by the  Directorate  General for the  EU Budget
Agriculture policy by the   Agricultural  D.G.
The Council for Europe is the major legislative  body of the EU.
 
CAP IS ANTI- WELFARE
The CAP is a regressive tax paid mostly out of income tax to reward the wealthy and privileged . CAP has  increased the price of food.
 
CAP HAS INCREASED LAND COSTS FOR NEW HOUSES   
 
ABOLISHING / SEVERELY REDUCING THE COST AND EFFECTS OF CAP
Britain is a valued member of the EU.   The workings of CAP as shown above are not rational, not democratic and have a negative welfare effect.  It is necessary as a minimum measure , to severely reduce the burden and the effects of C.A.P. for UK citizens .
This can be achieved by the co-operation of the E.U. or unilaterally by UK if necessary by reducing pro rata the UK contribution to EU or reconsideration of our role within EU.
 
 
References :
 
The Common Agricultural Policy, 2nd Ed .  Edited by  Ritson and Harvey 
www.cap-payments.defra.gov.uk
 
James Armstrong  August 2010 .

asury in a written correspondence; puzzling however how the figure quoted of £10.3 billion was ommitted from the Annual Abstract of Statistics by the ONS). After explaining the origins of CAP and how the new system of Single-Farm Payments (reformed from the previous system of production-subsidies) still rewards the largest landowners, this time quite unashamedly in accordance of land-area, he went onto a discussion around the subject of comparing this situation with the original objective of what CAP actually stands for – which was to “reward agricultural-workers”

https://groups.yahoo.com/neo/groups/Diggers350/conversations/topics/2860

Open Day

http://yorkleycourt.wordpress.com/2014/08/23/open-day/

There are emails on our Yahoo group about a dodgy eviction attempt at Yorkley Court

Latest News from Yorkley Court defending land against illegal eviction Sent: Wednesday, 25 June, 2014 11:21
There has been a 48 hour stand off between private security contractors and residents & supporters of Yorkley Court Community Farm.

Legal updates

_______________________________________________
Uk mailing list
Uk@lists.reclaimthefields.org
http://lists.reclaimthefields.org/mailman/listinfo/uk

Charlie Hague and Megan William’s roundhouse in North Pembrokeshire fails retrospective planning application permission? Council officers are recommending that retrospective application be refused after it was built without planning permission (June 17 2014)

http://www.walesonline.co.uk/news/wales-news/hobbit-house-pembrokeshire-set-knocked-7281663

On Saturday 12th July 2014 The Land Is Ours in conjunction with Bristol Housing Action Movement presents………

Former Sunday Times ‘Rich List’ journalist Kevin Cahill is the author of ‘Who Owns Britain’. Beginning at 1pm he will discuss & explain the inequalities of land ownership in the British Isles and former empire. After a break at 2pm Kevin will answer your questions. Venue opens for refreshments at 12 noon… social until 5-6pm.

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ELC exists to provide affordable opportunities for land based activities in the UK.  At our first site in Devon, we have created 3 smallholdings with temporary planning permission for agricultural farm businesses.  We plan to raise community share capital and establish more sites over the next few years. We hope to create changes in the planning system and a network of people managing and owning land ecologically.  We have work days on site and we can offer occasional advice. More on our website: www.ecologicalland.coop

Grow Your Own Home are establishing a series of combined social and skill sharing events intending to create a critical mass of empowered groups ready to start new Low Impact, Cooperative, affordable housing clusters.

http://www.growyourownhome.org/

In 1638, with special pleadings from Archbishop Laud, Charles I addressed the privatization of land, enclosure, by fining rich merchants and parliamentarians who had evicted villagers from collectively managed open fields. Only ‘freemen’ owning land worth over 40 shillings a year could vote so the merchants had effectively been voting themselves growing land the poor needed to feed themselves.  Charles I, perhaps bravely, perhaps foolishly, tried to buck the trend of the creeping privatization of land, but the merchants secretly organised against him, launched the English Civil War and he lost his head in 1649. The merchant classes were now firmly in power and ready to bring their new-fangled capitalism to the world.

Prince Charles strikes another blow for the British republic

Beginning his working life in the aviation industry and trained by the BBC, Tony Gosling is a British land rights activist, historian & investigative radio journalist.
http://rt.com/op-edge/161020-prince-charles-strikes-blow/ Published time: May 23, 2014 10:42

There is an air of unreality to Prince Charles’ spin-squad attempting this week to prove that the future British Head of State’s comparison of Putin to Hitler, while surrounded by journalists on a royal tour, was said in a ‘private conversation’.

It is not just that his views show how out of touch he and his PR team are with the nation and the real world, but Charles’ flippant remarks draw unwelcome attention to his own and his family’s close connections to Nazis, and related war-mongering.

His father Prince Philip, Duke of Edinburgh was educated for a time in Nazi Germany and his four sisters married black-uniformed SS officers (three of them, Sophie, Cecile and Margarita, joining the Nazi party). Philip admitted to then having ‘inhibitions about the Jews’ to an American academic and feeling ‘jealousy of their success.’ Charles’ great uncle, the abdicated ex-King Edward VIII, was such a swastika-waver that MI6 had to banish him to Bermuda for the duration of World War Two, thwarting his and his Nazi wife Mrs Simpson’s attempts to join Hitler by crossing into occupied Europe.

Charles himself has come quite close to publicly endorsing Hitler’s slippery chief Architect and Armaments Minister Albert Speer by hiring Speer’s greatest devotee, Léon Krier, as his own chief architect for his Duchy of Cornwall’s extensive building projects. Writer and broadcaster Jonathan Meades in his 1994 documentary, ‘Jerry Building’ nails Krier as the ‘Speer-carrier’ and ‘Keeper of the Toxic Flame’, pointing out that every one of Speer’s creations, which include the Nuremberg rally stadium, is inseparable from the inhuman experimentation and forced concentration camp labor used to construct them.

Charles’ great grandfather George V was one of the three ‘great’ architects of World War One, the so-called ‘Cousins’ War’, four years of mindless slaughter that began exactly a century ago. With two more Saxe-Coburg Gotha cousins, George’s hapless subjects slugged it out in trench warfare with Germany’s Wilhelm II and Russia’s Nicholas II’s unfortunates leaving, by 1918, a total of some ten million dead for no discernible purpose.

When in 1917 ill-mannered soldiers began pointing out that German Gotha bombers from another branch of the King’s family business were killing them, George V blithely announced that his surname was changing from ‘Saxe-Coburg Gotha’ to the more English-sounding ‘Windsor’.

Even masterpieces like Richard Attenborough’s 1969 feature film ‘Oh! What A Lovely War’, the BBC’s controversial 1986 drama ‘The Monocled Mutineer’ and the poetry of Geoffrey Studdert-Kennedy, Worcester army padre known affectionately as ‘Woodbine Willie’, do not quite reflect the futility of the war and the bitterness it stirred up amongst ordinary people.

Today, despite standing against the Nazis in World War Two, Her Majesty’s government and armed forces, who all swear allegiance to the Queen, are backing most of the dictators and despots around the world. From President Mahinda Rajapaksa in Sri Lanka with the blood of 40,000 innocent Tamil civilians on his hands, to King Abdullah’s brutal Saudi regime which still practices public beheadings. Charles’ tongue always speaks for the world leaders Amnesty International tells us are the bad guys, but he is looking to make money with them, whether through real estate or arms.

The Prince of Wales, Prince William, Princess Diana and Prince Harry attend the Heads of State ceremony in Hyde Park to commemorate the 50th Anniversary of VE Day in Hyde Park May 7, 1995.(Reuters / Dylan Martinez DM)

Are we witnessing the death throes of the British monarchy?

It started thirty six years after the bloodthirsty Knights Templar warrior-bankers were disgraced and dissolved, a new order of 26 ‘knights’ were initiated in 1348 that have dominated the British crown ever since. The Order of the Garter consists of two conjoined cells, each of thirteen knights that advise and ‘protect’ the monarch and heir apparent.

Because of their obsessive secrecy and lack of transparency over the centuries those appointed to these knights have become the very antithesis of Medieval chivalry, a lethal mixture of yes-men, and devious chancers who would sell their own mother to get a seat, and a cut of the rent, at the top table.

Nothing could illustrate more clearly the British monarchy’s distain for their poor subjects than Henry VIII’s asset seizure and eviction in the 1530s of around ten thousand monks from Britain’s monasteries. Since the days of Alfred the Great these holy orders had been providing a backbone of education and healthcare to the nation, but to Henry they represented a kind of Vatican fifth column, daring to question the wisdom of his break from Rome to form his independent Church of England.

In 1638, with special pleadings from Archbishop Laud, Charles I addressed the privatization of land, enclosure, by fining rich merchants and parliamentarians who had evicted villagers from collectively managed open fields. Only ‘freemen’ owning land worth over 40 shillings a year could vote so the merchants had effectively been voting themselves growing land the poor needed to feed themselves.

Charles I, perhaps bravely, perhaps foolishly, tried to buck the trend of the creeping privatization of land, but the merchants secretly organised against him, launched the English Civil War and he lost his head in 1649. The merchant classes were now firmly in power and ready to bring their new-fangled capitalism to the world.

by Mark S Brown (first written in Autumn 2006, updated Autumn 2007 & again in Oct 2013)

The economic divide between the beneficiaries of the financial property bubble and non-homeowners continues to widen in the UK, with upward pressure on land values and affluence-driven development. The cost of housing has now risen in real terms hundreds of percent in the last two decades, and now for the first time, household expenditure on housing has overtaken that on food and leisure as the biggest item in the weekly expenditure (the sale of houses in UK in 2002 reached the staggering total of £184 billion). In 1995 the average UK house price was £50,930. By the end of 2007 they had more than trebled to more than £170,000, an increase of more than 200%.* During this time average wages have failed to keep pace rising only 54% leaving house prices more unaffordable than they have ever been. After a slight dip in house prices with the global downturn after a peak of £172,415 in June 2008, average house prices recovered to £172,127 by October 2013.

[*All data sourced from Nationwide Building Society]

It is the primary indication of ever-widening wealth disparity; young families are increasingly priced out of the market with even key-worker housing schemes showing very low take-up rates because they are still unaffordable, particularly in London. Government targets for “affordable housing” become meaningless in a massively appreciating market. Many social housing schemes for subsidised ‘low-cost’ rent-and-buy housing require applicants to have a minimum annual income (in some cases this is as much as £28,758). Under these conditions the very definition of affordable housing needs to be brought into question.

SPECULATION

Speculation on housing in general is having a destabilising effect on house prices ‘crowding out’ low income groups. In the wake of the property/developer gold rush is the social fallout from rising rents, tenancies becoming less secure, and less social housing provision. Rising prosperity within the property bubble belies the reality of increasing economic inequality, and social disenfranchisement particularly of younger generations with limited scope to step onto the property ladder in a vastly inflating property market. The 18 to 35 age bracket are particularly caught in a highly-inflated private rented sector, unable to afford to get onto the property ladder within a market where house prices are completely out of their reach. Particularly in the UK, inflated property values have become the collateral investment stores of wealth for a financial hub in the City of London which is recycling economic proceeds from investments across the world, with the proceeds shared through big bonuses and share dividend payouts creating an elite section of the property-ownership class. Much of “wealth creation” today originates from the financial services industry in the City of London and Canary Wharf. In 2007, at least 42 of the 54 billionaires with UK status protected the majority of their wealth through utilising overseas tax-havens either through ‘non-domicile’ status, or ‘non-residence’ status. The majority of the rich have also seen the proportion of their income paid in tax in per-capita terms within the UK drastically reduce over the last 20 years. Meanwhile, the growing underclass in sink-estate Britain continues to get further economically marginalised, whilst for the public sector working population, pay awards for productivity gains are frozen.

RIGHT TO BUY – RIGHT TO SELL

From the early 1980s onwards, the reduction in the amount of council housing stock came about because of the drive towards right-to-buy under Margaret Thatcher, with the offer of the sale of council houses at huge discounts to sitting tenants. Money realised on sale was not ploughed back into social housing, and, because of absurd rules on the use of capital receipts and the less-than-value sales, councils were prevented from building new homes to replace those sold. Through this process ‘housing’ became only ‘property’ and Government policy ever since the early 1980s has been destroying the stranglehold large municipal authorities have on housing and reconfiguring basic needs as demand in a privatised market.

The legacy has been record high waiting lists, record low new tenancies, and the run-down condition of council stock due to years of inadequate council financing. Across Britain, the reality is that council housing was deliberately run down into a state of dereliction beyond councils’ financial capability to deal with it, to then be used to justify the wholesale transfer of council housing stock to the private sector. The accusation is that Housing Associations are now little more than property development companies, criticised for being deliberately complex structures, set up that way to both avoid tax (through their charitable arm) and accountability. For many housing associations or ‘social landlords’, the company structure is ‘Sui Generis’. There are no shareholders, and they are instead managed by a board, usually comprised of roughly one-third councillors, one-third tenants (usually selected by the Housing Association), and one-third outside business interests, which immediately means the tenants are a minority voice. Tenants rights are frequently undermined, with tenants’ rights for legal redress seemingly rendered unobtainable through systematic cuts to legal aid. Housing Associations receive state support and accumulate vast revenue streams, protecting part of their asset base from tax through their charitable status whilst tenant’s rights are eroded as dubious management practices are executed and rents rise in real terms over time. This is exemplified by one of the main housing associations – Notting Hill Housing Trust, also known through other shadow identities as Notting Hill Housing, Grove Lettings and others. Housing Associations benefit from legal and fiscal exemptions which even Rachman didn’t enjoy.

BANKING ON HOUSING

The underlying process of wealth accumulation through property and rising rental values, have served to make the local retail environment in many areas of urban and rural Britain in different ways economically out of reach of lower income people, such as the non-property owning sector of society. As with everywhere else, developers are only too keen to cash in on a rising property market and sell-off to the highest bidder. However, the extent of this rising property market and it’s socially-divisive ramifications is entirely due to excessive lending of the banking sector since the 1980s. Former Governor of the Bank of England – Eddie George, who headed the Bank for a decade from 1993, admitted to MPs on the Treasury Select Committee in 2007 that this relaxation of bank lending policy was deliberate government policy at the start of the 1990s, admitting that he knew the approach was not sustainable: ‘In the environment of global economic weakness at the beginning of this decade, we only had two alternative ways of sustaining demand and keeping the economy moving forward – one was public spending and the other was consumption through extending credit for increased high street spending.’ (evidence to the Treasury Select Committee, 20th March 2007). In May 1997 Gordon Brown told the government of the Bank of England to use consumer spending to stimulate the wider economy. This to be achieved by increasing credit and debt. Therefore a credit boom was underwritten by a flow of mortgage finance, leading to an unlimited amount of money chasing a finite housing stock, pushing house price inflation above 25% at one point and high street spending growth to its highest since the late-Eighties boom. Rising house prices are central to this policy. UK house prices have risen by over 100% since 1999 (according to the DCLG mix-adjusted house price index – Ref:  http://www.houseprices.uk.net/articles/odpm_regional/ ).

Against the rising value of their house, owners borrow £264billon per annum. This represents £564 billion to the banks when mortgages are repaid with interest. This large sum dwarfs the Government PSBR which was £43billion in 2006/2007 financial year, as well as the social housing grant £2bn, the cost of building new houses £20bn, and the value of all houses existing and new purchased in a year at £200 billion. Consumer debt has reached £1.3 trillion in 2007 according to the Bank of England. The UK mirrors the credit spiral in the US. The housing market price-spiral bubble is similar to the gigantic pyramid of inflated credit. When ‘bust’ follows boom, the financial institutions are best placed to benefit. They hold the title deeds and those suffering negative equity lose their homes and their savings.

As early as 2006, the ECB (Euro Central Bank) underwrote the banking system to bailout hedge funds who were in crisis as the financial markets panicked, pulling something like 95 billion Euro out of their magic hat like a white rabbit – a measure of the banking system’s ability create money out of nothing and it’s ability to appease the shortfall of capitalists to secure their speculative venture capital. In truth, as with the worldwide financial bailouts of 2008, it is a fait-accompli to oil the engine-pistons of the world economy suffering a sudden shortage of liquidity without which like-it-or not, the engine of global capitalism would grind to a halt – a fait-accompli because the prospect of global depression is too horrific to contemplate.

The effects of a relative rising cost of living and the squeezing of council finances, is a process related to the underlying privatisation of the money system, i.e. the crowding-out of public money by swelling of private credit. Local government services are cut and Public-Finance Initiatives are justified, whilst hedge funds get access to massive credit to help shore up their ability to profit. The proportion of public credit (money created by government*) has fallen from around 50% of the total money supply in 1948, to 16% in 1976, to less than 3% today, whilst indicating the rise of economic wealth, may be evidence that can be cross-referenced with this spectacular availability of credit for speculation and the explosion in property prices as the private banking sector through the loan-spiral process has ever-expanded with the relaxation of banking regulations.  [*Note that local authorities used to provide mortgages up until the 1960s]. The lending of money in August 2007 by the ECB served to bail-out a financial system that has over-extended itself. On 31st August 2007, Barclays borrowed £1.6bn from the Bank of England through the emergency lending fund to bankroll Barclay’s investments after a sudden shortfall in it’s exchanges on the open market. It was back in 2001 that a shaky equities market post September 11th drew pension funds and institutional investors away from the stock market and back to property, with a notable surge in investment of real estate investment trusts (REITs). A process that started around after 11 September because the stock market was too risky has recently started to be replicated again with the August 2007 sub-prime crash in the US, together with the biggest cash injection (3 trillions) in the stock market since the 11th of September 2001.

For more explanation of how the sub-prime crisis led to a worldwide near-financial collapse and subsequent bailout to a global downturn, read: ‘Part (ii): ‘Dollar Imperialism, and the long-term effects of international financialisation’, contained within ‘Chapter-5: Underlying Processes within Global Capitalism’ as part of the Legacy of Colonialism Forum Lead Article: ‘Colonial vicissitudes & the final passage of 20th Century Capital’

MEET THE NEW LANDLORD – REITS: WHAT ARE THEY?
Real Estate Investment Trusts – a tool of asset accumulation as an escalation of the division of wealth and class separation in Britain and across the world:

REITs are trusts that buy commercial properties, such as apartments, office buildings, and shopping centres which produce income. When a person buys shares in a REIT, they become a part owner in all of the property holdings of the REIT. REITs are traded like stocks on the major stock exchanges, so they provide the liquidity of stocks with the diversification and income of commercial real estate. REITs first appeared in the US, after being approved by Congress in 1960 to offer small investors a chance to participate in the commercial real estate market. There are now more than 200 REITs available on the major stock exchanges, including about 150 REITs on the New York Stock Exchange, and dozens more on the American Stock Exchange and NASDAQ market.

AGAINST REAL ESTATE INVESTMENT TRUSTS (REITs):

Throughout the world, Real Estate Investment Trust (REITs) are playing a rapidly increasing role in organising private financial investments in housing and cities. Real Estate Investments Trusts (REITs) are joint stock companies that primarily derive their income from real estate. They are free from corporate tax and they are legally forced to pay out high parts of their profits.

After a longer period of development in Northern America disastrous consequences on social housing are evident:

– Buying out of social, public and low-cost housing

– Rent increase and increase of heating costs, service charges etc.

– Demolishing of affordable complexes and replacement by more profitable buildings

– Disinvestments, neglect of/worse maintenance of the housing stock

– Pressure to leave on financially disfavoured tenants, replacements by wealthy residents

– the ending of social neighbourhoods programmes, participation process etc

– Construction on public spaces, privatization of public spaces

– Lobbying governments for weakening legal standards

– Exit to private funds

The large U.S. REIT AIMCO gave a shocking example how these investors

treat tenants.

* Video on forced evictions by AIMCO at Lincoln Place

Although negative consequences in the USA, Canada and elsewhere are obvious, the introduction of REITs in most of the countries took place without protests and even without critical debate. They just happened in the extra-democratic spaces where financial lobbyists make their deals with governments.

HOW DO REITS WORK?

Lots of small investors can take part by owning shares in the Trust which owns the buildings. This means they can buy or sell their shares in the trust easily whenever they like exposing homes to the volatility of speculative markets. No tax is paid by the Trust; tax is only paid by the shareholder, with their dividend income return added to their annual taxable income. If the shareholder is a charity (such as a housing association which has a charitable arm), the shareholder may be exempt from paying any tax at all.

‘In the United States and France, REITs have lead to higher rents and to asset stripping; where the most profitable housing has been enhanced at increased rents, whilst the rest has been left to decay or emptied for redevelopment or demolition.’ From London Tenants.org

There are several different types of REITs available on the market:

[1] Equity REITs own and operate income producing real estate, such as apartments, warehouses, office buildings, hotels, and shopping centres.

[2] Specialized REITs focus on a particular type of property, such as shopping centres or health care facilities.

[3] Geographically-focused REITs specialize in a single region or metropolitan area, while others try to acquire properties throughout the country. Mortgage REITs lend money to real estate owners and operators, and raise income from the interest payments on the mortgages.

4] Hybrid REITs own properties and provide loans to real estate owners.

FINANCIAL MARKETS: ASYLUM FOR CAPITAL

Taken from FROM CRISIS TO CRASH

Ref: www.beigewum.at

The financial markets prove to be an ideal place of refuge for anxious owners of capital. They are flexible and global. An IBM stock can be exchanged in a few moments for a Yen credit or a government bond. For big customers, the expenses are trifling. State incursions like taxes and restrictions tend to zero.

Profits were and are now gained from shares (dividend distributions based on business profits), national debts (compound interest financed by taxes), credits (interest payments from private or state debtors), organisation of firm takeovers or the purchase and sale of securities at the right moment. The latter is a very popular option since it requires the least waiting-time. Through deregulation and internationalisation, getting into and out of investments as fast as lightning is increasingly possible.

With this flexibility, pressure is exerted on everything that does not bow to the desires of investors. This structure is the central lever for the restructuring and realisation of better profit conditions for capital in general, not only the much reviled ‘speculators’.