The End of the Lollipop Loan
A word on the benefits of the crisis.
I remember my first attempt to borrow money from a bank in Estonia in the mid 1990s. Hansabank (now Swedbank) was still owned by locals and handing out generous loans to aspiring Estonian businesses. I needed much less than any business. After about an hour’s queuing, a thick pile of papers was handed to me by the teller. I started filling in the blanks. In addition to my income, they wanted to know precisely how much my family was spending for food per month. For articles of personal hygiene. For underwear. For alcohol. When I got to that line, I scrapped the forms and walked out of the room. I honestly don’t remember what the loan was for, but looking back, I’m happy I wasn’t hooked – that time.
During the rapid growth years of the past decade, Estonia went through a drunken real estate boom, and with it banks became psychedelic candy shops. Peremees, the nostalgically charged Estonian word meaning a 19th century farmer who bought his home from his Baltic German landlord, often mortgaging it for the next 50 years right away, became a catchword in the sales pitch of property agents. Hey, be a peremees in your own (albeit mortgaged) home, not a rootless loser! Unlike anywhere else I know, young people barely out of high school or college were charmed by the banks into taking 30-year loans to buy a home. Kids with no job security bought jerry-built houses in the new suburbia where cows had grazed a fortnight before. The rental market foundered: the little that was left unsold was merely on standby, awaiting potential buyers. Consequently, rent prices rose above all common sense and renters with average incomes were pushed out of the market. Seven-year-old future home-owners accompanying their parents to a local bank branch were handed their own junior ATM cards by the smiling bankers. Had the boom lasted another couple of years, credit cards with bonus point systems would have been introduced in playschools.
Now, after the common man’s nightmare of the global financial crisis, banks are doing better than ever thanks to loads of taxpayers’ money in the US and convenient schemes in our own back yard where banks may have pushed sound businesses into insolvency so that their own stakeholders can pick these up at a bargain price. What’s so particularly Estonian about all this? Here, the children were fed the sour grapes and now their unborns’ teeth may be set on edge.
If this is beginning to sound like revenge for my original frustrating banking experience, a correction is in order. I have a mortgage, too. My sympathy for the Venus Project – Jacque Fresco's call to replace the monetary economy with a resource-based one – is platonic; I do understand its utopian limitations, mainly arising from the human desire to outshine his neighbor in the bling department. But we ought to have picked up just a little wisdom from the recent collapse. What else is a crisis if not the beginning of a healing process? What I am beginning to see is a functional rental market for homes emerging in this country. Rather than being doubly handicapped with a long-term loan and a bad piece of property, more and more kids avoid the burden of home ownership, of being a peremees, at the age of 21 or 22, and decide in favor of the freedom to move on, to change places and scenery, instead of mowing the suburban lawn for the next 30 years. Thank the crisis for that.