Yesterday, I read a fascinating article by Niall Ferguson on the economic crisis. As a diehard renter, I was pretty thrilled to read what he had to say about homeownership:
Real estate is the English-speaking world’s favorite economic game. No other facet of financial life has such a hold on the popular imagination....
Once upon a time, people saved a portion of their earnings for the proverbial rainy day, stowing the cash in a mattress or a bank safe. The Age of Leverage, as we have seen, brought a growing reliance on borrowing to buy assets in the expectation of their future appreciation in value. For a majority of families, this meant a leveraged investment in a house. That strategy had one very obvious flaw. It represented a one-way, totally unhedged bet on a single asset.
If you're interested, the rest of the article can be found here.
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"She stopped, she looked at her brother. 'Isn't life,' she stammered, 'isn't life-.' But what life was she couldn't explain." Katherine Mansfield, The Garden Party
