Mortgaged Lives

Jul 17, 2019

Hi, sorry for the recent radio silence! I took a couple weeks off for life admin. I also moved this newsletter over to Substack for ease of use. You should be all set, but if this email ended up in your “promotions” tab, try adding dreammachine@substack.com to your contacts.

For the past few weeks I’ve been reading about housing finance, which is weird because a) I’m allergic to quantitative reasoning and b) it can get extremely tedious. But I feel like lefty urbanists should know a little bit about how housing systems work if we’re going to make arguments about fixing them. Or, at the very least, ward off the worst elements of YIMBY twitter.

Housing politics in planetary perspective

I’m really enjoying a new book by Raquel Rolnik called Urban Warfare: Housing under the Empire of Finance. Rolnik is a Brazilian planner who served as the UN Special Rapporteur on housing from 2008 to 2013, and her narrative reads like a detective’s conspiracy board of everything wrong with global urbanism. The best part is how she draws on her experiences with tenants around the world, using the particularities of each place to build a global critique of multilateral policy.

The first half of the book digs into what neoliberalism actually looks like in terms of housing, and how it spread across the globe. After many Western countries stopped producing and sold off their social housing stock in the 1970s, Rolnik shows how World Bank policymakers essentially forced developing countries to transform themselves into receptacles for speculative investment. In order to receive loans, dozens of nations replaced traditional forms of tenure with formal property rights, slashed their public housing programs, and pumped subsidies into promoting mortgage markets.

Those markets ended up swelling the international housing bubble, leaving first-time borrowers in places like Chile and Kazakhstan homeless after the 2008 crash. (There’s a lot of regional variation and comparative history in the text.) While it sounds a lot like what we already know about the financial crisis, I think this story goes a long way toward helping us challenge the economic consensus on its own terms: after half a century of campaigns for “allowing markets to work,” Rolnik writes that “financialisation policies were more useful for the expansion of financial markets themselves than for increasing access to housing for the poorest and most vulnerable.”

The second part of the book highlights what happens when state capitalism collides with spaces of “informal urbanism,” like Brazil’s favelas and Indonesia’s kampung. I think Americans often exoticize these places in their imagination — so it was refreshing to read an account that pays attention to the complex patchworks of customary rights, communal traditions, and grassroots movements at play in urban peripheries around the world. Rolnik also makes structural connections between stories that have cycled in and out of the news cycle over the years. She shows how disasters, sea level rise, Olympic games, regime changes, and development aid have all fed the consensus of creating “cities without slums” – a campaign to turn informal settlements into investment vehicles.

Mortgaged Lives

In the last letter I mentioned the part in Carceral Capitalism where Jackie Wang talks about the disciplinary function of personal debt. She writes:

“…we are, from an early age, socialized into a form of financial citizenship that compels us to accept indebtedness as inevitable and to constantly engage in self-disciplinary acts that authorize and extend the debt economy.”

With that still rattling around my brain, I was glad to find an article by Melissa García-Lamarca and Maria Kaika that extends this line of thinking on the “biopolitics” of debt into the realm of housing. They focus on the experiences of Spanish borrowers who were hounded into deceptive mortgages during the construction boom of the early 2000s. Thanks to a Spanish law that requires borrowers to repay creditors even after losing their homes, many people found themselves indebted for the rest of their lives. The authors insist on foregrounding this daily nightmare as the true context of financialization:

“…mortgage contracts enrolled not only personal income, but also the practices of everyday life as well as community and family relations as cogwheels into the global speculative financial strategies that drive capitalist urbanisation.”

Just when you think the situation couldn’t get any worse, you learn that post-crisis rules aimed at reforming the banking system hurt debtors even more. In 2012, regulators at the European Central Bank required banks holding mortgage debt to shore up their balance sheets with less risky assets.

Banks thus came under strong pressure to reclassify said debt as non-performing and sell it off at a fraction of its nominal value to international distressed debt investors. For example, in July 2014, 112,000 residential mortgages worth €6.4 billion were sold to the multinational investment and advisory firm Blackstone at almost half their nominal value. This practice casts families into uncharted waters and leaves them facing an even more precarious and uncertain future as there is often no office they can physically approach to renegotiate or pressure for a solution to their debt.

It’s worth mentioning that the current mayor of Barcelona, Ada Colau, and her political organization, Barcelona en Comú, emerged directly from mass mobilizations against these practices. It’s partly because the scale of debt is so breathtaking in Spain that movements like 15M and the indignados and the Plattorm for People Affected by Mortgages (PAH) came to prominence in the Spanish left. If you’re interested, you should check out Mortgaged Lives, the memoir/manifesto that Colau and her partner Adrià Alemany wrote about their movement. Their experiment in municipal government is only becoming more relevant to New York City as grassroots movements here start to take meaningful political power.

Resisting Blackstone

The private equity giant buying up borrowers’ debt has in recent years become the world’s largest landlord. And the company’s “aggressive asset management” strategy involves hiking rents, ignoring tenants, and packaging rental properties into financial securities (not unlike subprime mortgages). In some places it even enforces illegal lease terms, assuming that tenants don’t know any better.

So it was good news this month when the residents of a building in Barcelona’s historic immigrant district of the Raval (pictured above) successfully fought eviction by Blackstone and forced the company to make key improvements to the property. Their success followed on the heels of a rent strike against a Blackstone subsidiary in Madrid. If you follow along on Twitter, you can see that Barcelona’s neighborhoods are full of tenant activist groups who show up to stop their neighbors’ evictions.

One thing to take away from these mobilizations is that the “rules” of housing are not static and impartial; they are reshaped by politics from above and below. Blackstone maintains a business model of victimizing people because the legal order is tailored to their needs, and because there are no public repercussions for their actions. You rarely hear about rent strikes in New York, on the other hand, because they don’t square with the political culture of the neoliberal city. But they’ve happened hundreds of times during more militant moments — and they could happen again.

Global hedge funds like Blackstone and tech companies like Airbnb are also turning cities around the world into different sites of the same crisis. While tenants fight individual battles for their own neighborhoods, financial capital crosses borders and platforms. Seeing tenant unions win in Barcelona and the city municipalizing private apartments in Berlin is inspiring because it links the aspirations housing movements on different continents and expands the limit of what feels possible in any one context.

Dream Machine

Mortgaged Lives

Housing politics in planetary perspective

Mortgaged Lives

Resisting Blackstone

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