Over on Tim Ferriss’ Four Hour Work Week blog, I have been enjoying an interesting conversation about the impact of compound investment of time – rather than just money.
While I believe that the ultimate is living a life of passion and purpose rather than making an arbitrary amount of money or even enjoying a particular lifestyle, Tim’s concepts express notions that I believe have a great deal of value.
Check him out sometime – and he’s in Sydney this coming week!
Banks lend money for real estate more easily than other purchased on the basis that the value of the asset securing the loan is greater than the money lent. With a downturn in property values, individuals can end up holding negative equity in their property.
This is a problem. A big problem.
Our current system punishes individual lenders, holding them accountable for the whole amount.
But what if the banks were held accountable?
What if a home owner could settle the debt by simply handing the title back to the mortgagee? Would that more fairly distribute the risk according to the relative capacity of the parties to foresee such risks? Doubtless it would lead to lower property prices – though who would that disadvantage other than opportunistic property developers riding on the back of a pricing bubble?
Here in Shanghai, people talk about becoming a slave to their apartment, reflecting the overinflated property prices here compared with income… perhaps it is time to liberate our slaves.