PEER REVIEWS

IN   A   NUTSHELL

By John Robertson

The usual methods of calculating mortgage bond payment schedules do not take account of the buyers’ changing circumstances through the life of the mortgage bond, and neither do they take account of the value of the money being paid to the lenders. Over the years, severe imbalances have built up between demand and supply of mortgage funding as a result, and these have often spilled over into severely distorted price levels in the property market.

As the world’s more active economies are locked into the need to achieve compound rates of growth, the retention of level mortgage bond repayment schemes has slowly and steadily caused the development of distortions and stresses in the property market in particular, but in many other financial fields that try to satisfy the needs of both lenders and borrowers.

Having allowed linear payments schemes to remain in place for the past century or more, despite the exponential nature of normal growth aspirations shared by individuals and countries alike, major conflicts of interests have emerged, but until now, nobody has tried to fully explain them.

Now, Edward Ingram has sought to do so. His aim is to overcome the source of social and financial stresses that have accumulated to become serious threats to the stability of financial and property markets everywhere and have already caused serious problems in many of them.

Because they have caused fractures and disruptions at every level, the conflicting ideas are also the source of instability in the macro-economies of many countries, so inevitably their businesses and institutions are made even more vulnerable. These have been our findings.

COMMENTARY

Well that IS what happened – the financial institutions DID become more vulnerable. People must learn not to confuse this vulnerability with the sub-prime or other activities. When an interest rate hike is enough to raise borrowing costs by over 50% this has nothing to do with sub-prime  It has everything to do with the economic structure. And it is not just a 50% raise that we need to worry about. It is what happens when even a small interest rate change is made: the tilt that the current mortgage model gives to aggregate spending in the economy, the way it destabilises everything related to it from property values to budgets and interest rates and exchange rates and monetary policy that all get distorted are the main issues to be dealt with. The lower interest rates go the greater the instability in wealth and mortgages becomes because the lending structure is itself unstable and it gets more unstable the lower interest rates go. The lower interest rates go, the greater the volume of the nation’s wealth that gets involved in housing finance and housing assets, and the more sensitive mortgage multiples and property values become to a given interest rate change. So, because of these debt structures, the lower interest rates go, the more unstable the whole economy becomes, and the harder it becomes to escape from low interest rates and low economic growth.

2.
MEDIA TESTIMONY

Previously Steve Short had written this, letter (at right) which helped the writer to get the credibility needed to form the commission and to enroll Zimbabwe’s top team into the first commission of enquiry which was an unpaid voluntary group:

3.

FROM THE INSTITUTE OF ACTUARIES

LONDON HQ

Then, in 2004, the findings of the commission of enquiry were taken to the Institute of Actuaries in London which produced this email from Roger Bevan:

Subject:	RE: Ingram's Lending Systems - Press release for specialist media, cc FT.
Date:	Thu, 28 Oct 2004 20:37:08 +0100
From:	"Roger Bevan" <rogerb@actuaries.org.uk>  View Contact Details
To:	"Edward ingram" <Edwarding2@yahoo.com>

Edward,

 Further to my e-mail yesterday, we would like you to delete the three lines that start 'PRESS references ...' and end 'Tel: 0207 632 2100' and alter the four lines that start 'Mr. Ingram recently visited ...' to:

 Mr. Ingram recently visited the Institute of Actuaries in London for a further peer review. The two people at the meeting - Roger Bevan FIA and his colleague Mark Symons - were both impressed. They suggested that Mr. Ingram should pursue his attempt to interest a commercial partner, taking care to safeguard his intellectual property.'

 I trust you will be happy with these changes and Mark and I wish you success in attracting interest as a result of the press release.

With kind regards,

Roger 
  Roger Bevan
Staff Actuary
The Actuarial Profession
Staple Inn Hall
High Holborn
London
WC1V 7QJ

COMMENTARY:

Unfortunately, when this mortgage model offered to the lending industry, the attitude of the lending industry was that there is no problem – all problems have been solved and the writer is behind the times. His new ideas are not needed. Lenders would regard these new ideas as a way to curb lending and reduce profits. They would not be welcomed.

When the crash came due to over-lending... because the Fed had built in a 50% increase in the cost of their adjustable mortgages, Edward made frantic phone calls to governments and central banks in the UK and the USA, all to no avail. They knew there was a crisis, they thought they had all the expertise needed to handle it, but in fact they were very confused. The tools needed to deal with the crisis were not available.

In a final attempt to get a hearing, this was written on the letterhead of another one of the big four international consultancies, but it had to be kept anonymous for that very reason – so the writer has not been identified, nor the consultancy. The original is on file.

4

THE BEST TESTIMONIAL

To Whom It may Concern

I have met with Mr. Edward Ingram on several occasions and discussed his theoretical proposals regarding models to solve numerous financial crises that the global economy [has] been faced with.

I can conclude without doubt that these models are credible and academically sound. The logic behind the construct of the results of these models is clear and comprehensive.

I fully support and pledge my assistance in the venture put forward by Mr. Ingram.

Best Regards,

(Name withheld) 

Actuarial Analyst

Actuarial & Insurance Solutions

So these, and his published blogs and the talks that he has given, gaining strong approval at a number of universities, are Edward’s qualifications for making these proposals as announced publicly in his Blogs. His risk management strategy for Mortgage Finance was given pole position in the 2012 Almanac of the GlobalRisk Community Forum.

THE QUESTION OF MAKING IT HAPPEN

With this kind of backing, the governments of the world should not have a big problem with setting up a commission of enquiry in each and every nation or else in a world forum or regional forums.

Having examined the practical issues relating to ‘selling the new structures’ a report on how that may be done very effectively is included in the agenda for the commission of enquiry.