Thought for the Day, 24 September 2007

Rhidian Brook

Whilst re-mortgaging last month I discovered that I fall into a newly defined category of human being. Formerly my mortgage, designed for people who are self employed, was called a self-certification mortgage; now - thanks to a financial crisis - it's sub-prime.

We may not be able to predict the outcome of the current crises, but it's certainly adding to our vocabulary - words that were known only to financial institutions in Milwaukee now slip effortlessly into our conversation. None more so than the slightly sinister adjective: 'sub-prime'.

According to the US Department of Treasury sub-prime borrowers "typically display reduced payment capacity". Or, to put it another way, they don't have much money. It's hard not to hear in this the echoes of other demeaning stereotypes - America's poor white trash, or our own 'council housed and violent', chavs . It's perhaps why certain financial practices and product names hide behind euphemism: in warfare we have 'collateral damage' to describe innocent people killed in a military operation; in the financial world banks sell loans to people who can't afford them; then package the debt and define it as an asset. It's a fudging that allows us to avoid saying what a thing really is. As the economist Galbraith put it: "the study of money is one in which complexity is used to disguise truth".

The trouble is our whole system seems to operate on debt. So much so that it's seen as naïve or unfashionable to question it. Being in the red is the new black. Even though many of us with a mortgage (a term that originally meant death pledge) know full well that when we fill out a form asking us if we are a home-owner we are so merely for the purposes of filling out the form. 'Home borrower' doesn't sound quite, well, 'prime' enough.

Could it be that the creeping euphemism is a sign of sickness in our system? One that allows us to accept the twisted logic that defines debt as valuable and where those who can least afford loans pay higher interest. Is the best explanation of this debt that global growth and prosperity are dependent on it and that occasional adjustments and wobbles are necessary? All the time we use evasive terms we are really avoiding the human cost. Many people currently experiencing 'a correction' in this crisis are not reckless gamblers who shift debt or even lenders encouraging the taking of loans, but people simply trying to get by.

Maybe the system needs a different kind of correction, and a different kind of wisdom from the sub prime variety we've been believing these last few years: advice that doesn't use euphemism or hedge its bets but that says what's at stake. Sounds naïve? It's been suggested before: Take this from Exodus: "if you lend money to one of my people among you who is needy... charge him no interest. And if you take your neighbour's cloak as pledge give it back by sunset because his cloak is the only covering he has." In this financial system lending isn't based on risk but on trust; it's for securing not exploiting. And people quite clearly come first before products.