THE BIG SHORT(AGE)
Remember watching Michael Burry bet against the housing market? And, perhaps, how he predicted the 2008 crisis? Well, taking references from the film and the Special Rapporteur’s statement (link to the report: https://www.ohchr.org/en/NewsEvents/Pages/DisplayNews.aspx?NewsID=21264&LangID=E all thanks to Coursera), I’d say ‘finance’ is a word that has been subject to uncertainty and doubt since the very beginning (I dare not mention consumer psychology, though). Hence, it is unfair to picture a layman going gaga over attaching the word to the most precious of all possessions- their home, without resentment. The report, however highlights the negatives of Financing only.
For instance, take insurance policies which protect the investors from loss due to unforeseen disasters and events that could have left anybody’s valuables in ruins, otherwise. Another example is the inflation indexed debt providing protection from devaluation of debt. Yes, cover against the “safest” investment also is being provided, if things go south. Innovation, invention and ideation being the pillars supporting the world of finance, we see how far it has come. Hence, simply ignoring the sweet fruit of finance is unjust. As they say- nothing is fully black or white, it’s all grey here.
Coming back to the report, I would agree with a few claims like- inequality and causing displacement and homelessness. Everyone deserves a good and comfortable housing. All who work for a living, know how hard it has become to earn and get established in the market with a firm footing.
A manipulative market player, or better put, anyone like the ‘wolf of wall-street’ knows very well how to play their cards and feed on somebody else’s bread. These malpractices, too exist in our world. Hence, instruments like mortgage-backed securities have had a negative image, ever since the crisis of 2008, even though they can and they do make housing more affordable to some extent.
With financialization of housing, home equity protection can cover against declining prices. Hence, it might prevent displacement in the future. Here, the call of the hour is to spread awareness and provide more protection, in a way that reduces market manipulation. Housing is a Human Right indeed that should be available to one and all- the governments of different countries are also trying to do so, as mentioned in the report, but in my opinion, removing the word ‘finance’ from any of our assets is next to impossible. It has had its ill effects, but it also caters to our primary needs, ensuring affordability, making it a Human Right known to all and hence, enjoyed by everyone.
