• Credit Crunch or Financial Famine?
• Good year for Footprint
• Co-op plants 2 million trees and buys a forest
• Out of Town not quite so out of town
• Enheduanna update
• Rootstock contributes to international finance seminars
• AGM in Scotland

Welcome to our Spring 2008 newsletter. We’re happy to report that we’ve received the extra investment we were looking for in 2007 – thanks to everyone who has invested. This year we’re seeking an additional £100,000 in investment. While mainstream financial institutions have been hit by the credit crunch, it is more important than ever to promote alternatives such as Radical Routes co-ops. For new co-ops who have been struggling for years to find affordable property, falling house prices could be the light at the end of the tunnel. A Radical Routes loan can bridge the gap between what the co-op can borrow from a bank (probably less than before because of the credit crunch) and what the co-op can raise itself. With your help, we can ensure that the light at the end of the tunnel is not the headlamp of an oncoming train!

Credit Crunch or Financial Famine?
The credit crunch, Rootstock and Radical Routes

What does “ninja” mean? Normally it means a type of Japanese warrior, trained to operate by stealth - a mediaeval Japanese equivalent of the SAS, you could say. Some people might remember seeing ninjas in the James Bond film “You Only Live Twice”, or the Teenage Mutant Ninja Turtles.  

Recently, however, “ninja” has taken on another meaning. “NINJA loans” are loans made to people with No Income, No Job or Assets. They have been cited as an example of the irresponsible lending practices that led to the “credit crunch”. US banks mixed NINJA loans with other risky loans, cut up the whole lot into segments with supposedly different levels of risk and sold them on international money markets. When it was discovered that even some of the supposedly less risky segments were close to worthless, the entire money markets seized up. Mortgage lenders relying on money market funding found their funds drying up. Smaller ones such as Victoria Mortgages went bust without much public knowledge, but the run on Northern Rock, its failed sale and subsequent nationalisation became a major scandal that has dented people’s confidence in the financial system.  

Radical Routes, on the other hand, has a 100% repayment rate on its NINJA loans. Back when Radical Routes started, it was quite common for all the members of a new housing co-op to be unemployed. In Thatcher’s Britain with its shockingly high unemployment rates and blacklisting of activists, this was nothing unusual. Likewise, it was quite common for radical activists who were unemployed and had little in the way of assets to set up a workers’ co-op. Radical Routes made loans to both types of co-op, and all the loans from those early days have long since been repaid in full. We still think that unemployment and lack of assets should not be a barrier to setting up a co-op, though these days it is much less common for all the members of a co-op to be unemployed.  

So, how did Radical Routes become masters of ninja finance? When activists with a strong sense of solidarity joined together in co-ops, this created a powerful form of mutual aid. Help is on hand for any co-op facing a crisis, leading to a better survival rate for co-ops in the network than those outside it. All the same, now that the financial system has got itself into one of the biggest messes in history, how will this affect us? We can’t predict the future, but we think it will probably affect us less than most financial institutions. Rootstock does not attempt to separate money into different risk categories like banks do. The first £35,000 of someone’s bank deposits may be guaranteed by the government, but these deposits can only be lent out if the bank has adequate capital such as shares and reserves. Recently, bank shares have fluctuated widely in value, halving over a year in the case of Royal Bank of Scotland, and collapsing completely in the case of Northern Rock. All Rootstock investments are in one form, withdrawable shares, which normally can be repaid on notice and so normally keep the same value – but aren’t backed by any guarantee other than the commitment of co-op activists which has kept Radical Routes going for nearly twenty years.  

Co-ops have been struggling to buy houses in the last few years. House prices were driven up by absurd “cashback” deals like 125% personal mortgages (“the more you pay for your house, the more cash we give you”) which the banks are now suffering for. Co-ops have always been excluded from these deals and rarely get mortgages over 70-75%, which is why Radical Routes set up its loan fund. Indeed, many new co-ops see the fall in house prices as an opportunity, as they can finally see themselves affording to buy a house (or another house, if the co-op already has one or more houses). This means that the demand for Radical Routes loans is likely to go up. As a result, Rootstock is seeking to raise £100,000 of additional investment this year and a further £100,000 in 2009.  

Finally, we must remember that the “credit crunch” in the developed world, together with the hike in oil prices, the rush for biodiesel and the resulting high food prices, are causing a “financial famine” in the developing world. As millions of families go hungry because they can’t afford food, groups campaigning against the unsustainable and inhuman policies that brought it all about are more important that ever. Several Radical Routes co-ops provide a base for radical campaigning groups with free or cheap office space. These cost savings mean that £2,000 invested in one of these co-ops or in Rootstock might save a campaign group perhaps £100 a year in office costs, and so be as effective as donating £100 per year to a different campaign group based in expensive offices.

Good year for Footprint

Footprint Workers Co-op, who print a wide range of leaflets and publications, including this newsletter, from their basement premises in Cornerstone Housing Co-op in Leeds, have had a good year. A new member has joined, and they donated over £1,100 to good causes after making a profit of about £7,000. For more details, see their website www.footprinters.co.uk or call them on 0113 262 4408

Co-op plants 2 million trees and buys a forest

A forestry co-op in west Wales has celebrated planting over 2 million trees over the last 12 years by buying a 325-acre forest next to the Radical Routes housing co-op where they are based. Growing Heart (Talon y Cyfu in Welsh) has become the owner of Ffynone and Cilgwyn woodlands in west Wales. Within these woodlands are 4 rivers, a waterfall and a small lake. The site is a SSSI (Site of Special Scientific Interest) and is part of an SAC (Special Area of Conservation). The origins of all of this came from Pangaia Housing Co-op which has been based at the farm next door to the woodlands since 1993. With the help of a £19,000 Radical Routes loan, Pangaia bought the farm. The group converted it to an organic farm and set up the forestry co-op. Initially working mainly as forestry contractors, they set up a tree nursery and collected large quantities of tree seeds. After many years of success they were awarded a Cyd Coed grant to buy the woodlands. For more details, see their website www.growingheart. co.uk which also gives details of their forestry-related courses, or write to them at Henparcau Farm, Bwlch-ygroes, Boncath, Dyfed SA37 0JY.

Out of Town not quite so out of town

Out of Town Housing Co-op have moved, and are now slightly nearer to the centre of Brighton. They had to leave their home of the last few years on the edge of Brighton. With continuing high house prices in the city, they were not yet in a position to buy a suitable property, so have taken on a couple of housing association properties where they can stay until 2012. They still hope to buy a property one day. In the mean time, they have invested some money in Rootstock to help other co-ops who have a more immediate need for investment.

Enheduanna Update

Enheduanna is a housing cooperative in Birmingham consisting of five young adults looking for a property. We’re a member of Radical Routes, who agreed to lend us about 15% of the value of a house at the winter gathering. Since then we’ve been struggling to raise the £30,000 we’ll need, on top of the mortage and Radical Routes loan, before we can move in. Birmingham’s such a huge city; it seems ridiculous that there’s only one other fully mutual co-op here. As well as solving our housing problems, and letting us move out of landlord owned rented accommodation we hope that Enheduanna will become a lasting social project in Birmingham, providing a focus for social action and hopefully encouraging more people to set up co-operatives by our working example. We didn’t chose the name Enheduanna, but we quite like the fact that because no-one’s really sure what it means, or how to say it, it seems to have taken on a life of its own.
To get in touch email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 07800 860 343

Rootstock contributes to international finance seminars

People from Radical Routes and Rootstock have been invited to speak at a seminar in Berlin on finance for co-operative housing. Besides being very encouraging, this will give us a good chance to test how well we can speak German! Rootstock’s treasurer, Stuart Field, will also be talking at the International Social Banking conference in Denmark this summer on networks for solidarity finance. His talk will cover Rootstock and Radical Routes together with similar networks in the Netherlands and Germany, and compare them with other networks such as Camphill communities. Stuart is currently studying for an international MA in Social Banking and Social Finance together with people from social banks and ethical financial initiatives across Europe.

AGM in Scotland

The Annual General Meeting of Rootstock Ltd and Radical Routes Ltd will be held at Talamh Housing Co-op, Birkhill House, near Coalburn, South Lanarkshire, Scotland, ML11 0NJ on Saturday 31st May 2008. Member investors of Rootstock Ltd should receive formal notice of the
AGM with this newsletter.