Wasta on Steroids: Speculative Finance & the Housing Market

14 June, 2021

Mischa Geracoulis

By the end of this account, I’ll relay how wasta in the speculative “housing empire of finance” — to borrow a phrase from Unequal Cities‘ Raquel Rolnik — has rendered me a transient. First, a few words on wasta. While it belongs to the Arabic language and is a transactional medium most associated with the Arab world, the concept of wasta is worldwide and advances through a variety of circumstances. The idea of calling in a favor, having “pull” because of who you know, receiving preferential treatment, special protection, or celebrity status is by no means an Arab thing. When VIP anywhere becomes the modus operandi, depending on who’s holding its sway, wasta may enter the realm of corruption.

Consider multinational organizations and corporations that dominate certain markets — some are legal (albeit unscrupulous or amoral perhaps), such as media conglomerates, holding companies, extractive industries, and private equity limited liability companies, while others are illegal — drugs, arms, human trafficking and illegal selling of endangered species and natural resources. Sometimes there’s no clear demarcation between nepotism and mafioso, between tax evasion and tax avoidance, between legal and illegal cashflow, or between corruption and suspect accounting. The latter of each might be viewed as an extreme version of wasta.

High housing costs are accelerating poverty everywhere, and in nations like the United States and United Kingdom, for example, homelessness is rising at shocking speeds.

Push (2019, Sweden), the award-winning, investigative documentary by director Fredrik Gertten, brings to light a particularly virulent strain of corruption — the financialization and marketeering of housing.  Featuring Leilani Farha, Canadian lawyer, UN Special Rapporteur on the Right to Housing (2014-2020) and Global Director of The Shift, an organization and movement that advocates for the human right to housing, Push casts the “dark building” phenomenon into the limelight, illuminating the oxymoronically-termed “housing market,” the commodifying of a most basic human need and right, and what Transparency International calls “land corruption.”

Spotlighting the actors and factors that have created and escalated this near-worldwide phenomenon, the film explores housing exploitation in such cities as London, New York, Hong Kong, Toronto, Tokyo, Valparaiso, Sydney, Melbourne, Caracas, Barcelona, Paris, Amsterdam, and Stockholm. Priced-out housing doesn’t stop at metropolises; smaller towns and suburbs are being impacted too. High housing costs are accelerating poverty everywhere, and in nations like the United States and United Kingdom, for example, homelessness is rising at shocking speeds. To be clear, high housing costs and homelessness are not natural or normal outgrowths of progress, but are red flags for the invasion of finance — “private equity” and speculative money that turns homes into investment assets.

Most disconcerting is foreign-owned, unused housing — condo buildings, apartments, and single-family homes that are purposely kept vacant, or “dark.” Investment owners are not interested in becoming landlords; rather, the goal is to create “securities” with the properties, which are sold to investors as assets; and then sold again and again and again.  Such “high frequency trading” is patently more profitable than the one-time sale of a house.


Stream the film Push on demand .
Stream the film Push on demand.

Housing:  one of today’s most pressing & controversial issues

Fundamentally, Push advocates for the universal right to housing as enumerated by the United Nations 1948 Declaration of Human Rights, article 25.  Home is a precondition to a safe, healthy, dignified life; and yet worldwide, proper housing is increasingly unaffordable for the middle and working classes. Take the super-heated “housing market” in Toronto. At the time of the film, housing prices there had increased by 425% in the last 30 years, well outpacing income, which had increased only by 133%.  Overarching questions the film poses are, “Who are cities for?” and “What is home?” Are cities turning into playgrounds for the ultra-rich?  Do only the privileged, those with wasta, get to call the shots?  To delve into these questions requires some background information.

A relatively new phenomenon known as “dark buildings” is the buying up or putting up of luxury residential mid and high-rise buildings that are intended to remain vacant, or “dark.”

As a result we see the buyout or forceable pushout of locals and natives who had originally occupied the area. There are nuances, of course. In some cases, cities welcome or invite foreign investors to buy into their country, offering attractive incentives. Such is the case in places like Greece, Cyprus, and Malta. In Greece, a majority of those buying in are from China and Russia. If investors choose to disclose their identity (instead of operating via private equity, which we’ll dive into later), among the bonuses they receive is the “Golden Passport” — in other words, EU citizenship.

In South America, in Chile for instance, investors (private or otherwise) are lured by the promise of profits from luxury vacation condos, mining, and exporting.  As regards Chile, the film reminds viewers of Milton Friedman’s neoliberal experiment on which dictator Augusto Pinochet (1973-1998) seized. Friedman’s ideology that the market solves all problems, amped up by the likes of Reagan and Thatcher, has led to increasingly more privatization and deregulation of industry, commodification of social goods and services, and reduced taxes for corporations and the rich.

The corporate media, and perhaps conventional wisdom, would have us believe that the COVID-19 pandemic is responsible for empty pubs, reduced shopping, housing evictions — for dead zones.

In the film, Joseph Stiglitz, American economist, public policy analyst, Columbia University professor, chief economist at the Roosevelt Institute and former chief economist at the World Bank (1997-2000), asserts that the neoliberal agenda ignores all the areas where markets do not best serve. Friedman essentially “greenlighted greed and gave justification as to why morality should be of no concern.” Sure, says Stiglitz, with this outlook, loads of money can be made, but with a blind eye to the rest of the world. Hence, the neoliberal ideology has helped hurtle us forward to where we are today.

To better understand its effects on housing, it’s important to differentiate between investor-driven construction versus localized, community-based stakeholder projects.  Construction for investment works as a repository into which capital pours, sometimes creating “dead zones” in cities. A dead zone might look like empty high-rise condo buildings that are priced above the means of the local economy. It’s a façade for normal life without any real activity — no cafes or pubs, and no shops, perhaps aside from a few high-end boutiques.

The corporate media, and perhaps conventional wisdom, would have us believe that the COVID-19 pandemic is responsible for empty pubs, reduced shopping, housing evictions — for dead zones. Much of the western world is seeing record-low housing availability. We’re told that, due to COVID-19 and/or low interest rates, escalating home sale and rent prices are the cause. The law of supply and demand seems clear; and yet, the situation is not straightforward because there actually is new residential construction, especially in mid-rise and high-rise condo buildings in cities and towns across the US, UK, and EU.

Looking around the world at cities and towns with new construction and/or revitalization projects that oust historic residents, superficially, gentrification assumes some of the blame.  Referring to the process of renovation and/or renewal in deteriorated neighborhoods by the more affluent classes, gentrification oftentimes results in an influx of higher-income, demographically different residents, displacing lower-income residents. As Saskia Sassen, professor of sociology at Columbia University, says in the film, “If only!” Somewhat to her point, gentrification isn’t necessarily exploitative, or always only beneficial to an elite few. To be fair, in best case scenarios, developers, historic residents and newcomers can opt to work together, treating decision-making as an inclusive, democratic process that positions diversity as desirable, and prioritizes humanity above capital.

Mentioning capital, one might assume that such property development and ownership is simply a function of capitalism, that the market is playing out as it may.  At times an invisible hand is at play, but not in ways that Adam Smith imagined it; and therein lies the dilemma. Overwhelmingly, ownership of these vacant dwellings is held by private equity corporations.  Nothing to do with providing housing, ownership of residential dwellings, as it turns out, is more profitable than stocks or money in the bank.  This is problematic on multiple levels.


Defining our terms

Before going further, let’s define some key terms specific to this division of the financial sector known as “private markets.” For clarity’s sake, old school commerce is different from finance.  Commerce is the exchange of goods and services. In a traditional capitalist model, competition can work as the mother of invention, impelling the creation of better goods and services. Not so with finance. Finance is the selling of something intangible. Sassen likens finance to mining. It’s extractive, it takes, and is certainly not an even exchange.

Private equity refers to shares or stocks in a private corporation, whereas public equity refers to shares or stocks in a public corporation. The private equity industry is comprised of high-net-worth individuals and corporations, whereas public equity targets the general public who can buy, sell, and trade shares. Public equity investors, as the label implies, means that the names of individuals and companies comprising the investment group are publicized. Required by law, their financial information exists in the public domain; not so for private equity investors.  Private equity investments are made in mature, traditional industries, like housing, in exchange for “equity,” or majority ownership. Private equity firms invest with the sole goal of turning a profit. Ownership of majority stakes in multiple companies make up the firm’s portfolio.

Typically, private investors buy into markets or companies that are stagnant, distressed or potentially distressed, yet show signs for growth potential. A common deal is the “leveraged buyout” (i.e. housing foreclosures, urban decline, thereby transforming real estate into assets).  Private equity investors trade among themselves, whereas public equity investors trade among the general population. Though less common, this isn’t to say that private equity can’t trade among the public. It can, but only with founders’ consent.  Moreover, there’s no governmental organization, like the Security Exchange Commission, for instance, to regulate private markets or obligate them to disclose any information, whereas public equity is regulated by governmental oversight and obligated to disclosures. By contrast, no or lax regulation allows for exploitation, removes all human rights’ safeguards, and sells political power to the highest bidder. Summarizing, Stiglitz states that “the asymmetry of information gives the few the ability to take advantage of many.”

In short, Push illustrates how housing — a basic human need and right — is commodified.  As Farha contends, “there is a huge difference between housing as a commodity, and, say, gold, as a commodity. Clearly, gold is a commodity, not a human right.” She goes on to explain that capitalism, in and of itself, is not the issue. However, unbridled, unregulated capitalism in the arena of human rights — in this case, the human right to housing—is what converts people’s homes into commodified, financialized profiteering.

In the United States alone, foreign investors account for approximately one third of all single-family rental homes. Once a practice associated with cities, especially since the pandemic, suburbs now serve as open markets for anonymous, foreign, private equity corporations with deep pockets. Canadian homes, namely in Vancouver and Toronto, are also favored by foreign investors. The crafty financial engineering that treats housing as a commodity is in no way limited to North America though. Cities in nations hard hit by austerity measures, like Athens, Rome and Barcelona, and those hit by war and political upheaval, like Damascus or Valparaiso, are rife with foreign-owned, private equity residential real estate ownership. War and occupation are advantageous for wealth redistribution, and the channels of private equity add to the stealth.


Democracy disrupted

Transparency International, the global coalition that works to hold to account the powerful and corrupt, includes in its explanation of land corruption the point that Push makes:  opaque deals between private investors and local authorities are often responsible for illegal or questionable evictions that result in housing takeovers and land grabs. Reducing available residential housing, fueling inequality, driving up housing costs, and depriving people of their right to home are maneuvers that hurt vulnerable individuals and communities the worst. Back-channel deals and decisions interfere with the very fabric of society, which is naturally conversant and interactive. Robbing local communities of information, participation, and decision-making power, land corruption disrupts democracy too.

Oliver Bullough, journalist and author, discusses that very point in his book, Moneyland, (St. Martin’s Griffin, 2020). If a democracy operates by taxes to pay for public goods and infrastructure, tax money (in theory and hopefully in practice), is used for common goods. If, however, there’s an influential segment of society that avoids contributing, they are, in essence, enjoying the privilege of citizenship without paying dues or obligations. That same segment is effectively breaking the social contract, opting out of democracy, which is particularly worrying if that segment also happens to be part of a society’s ruling class.   Bullough quotes figures from Global Financial Integrity, stating that approximately one trillion US dollars per year are moved from countries that receive international aid, like Angola, Nigeria, Azerbaijan, Kazakhstan, Ukraine, and India, and stashed “offshore.”


Mafioso business model


Italian journalist and author Roberto Saviano lives under death threat for disclosing the mafioso business model that includes offshore tax havens.
Italian journalist and author Roberto Saviano lives under death threat for disclosing the mafioso business model that includes offshore tax havens.

The success of these actions depends on the amenability of international financial systems.   Accomplished by the aid of wasta — or professional enablers like bankers, accountants, real estate agents, politicians, and lawyers who know how to work the system — private equity investors slip through loopholes, purchase influence, and obtain the ability to launder money as needed.  Asserts Simon Farrell, QC in the film, the loosely-termed UK “regulatory regime” is one of the world’s largest enablers of tax avoidance by allowing off-shore companies to purchase UK properties without disclosing their “Ultimate Beneficiary Owners” (UBOs), or without recording sales in a governmental registry.

Italian journalist and author Roberto Saviano is interviewed in Push. Living under death threat for disclosing the mafioso business model that includes offshore tax havens, he explains that at one time, the tax haven was really only a tiny, alternative sector of the economy utilized by those who deal in arms, drugs, and humans. Saviano describes how dirty money is laundered by funneling it through tax haven “shell companies.” According to the Washington, DC think tank, Global Financial Integrity, the process works to disguise the proceeds of crime by integrating it into the legitimate financial system. Illegally procured money, shrouded in secrecy, becomes untraceable.  That said, the new normal is for nearly all global corporations to have shell companies in tax havens.


What exactly are “tax havens” and “shell companies?”  

Tax havens provide a way to avoid or evade taxes, to glean greater profits, and to expand into other countries. A tax haven is not illegal, nor is it only comprised of ill-gotten gain; but it is where illegal and legal money easily mixes and mingles. ProPublica reports that giant multinational corps fearlessly stash billions in tax havens all the time.  Apple, for instance, while legally registered offshore in Ireland, deftly dodges taxes. Saviano puts this into context when he states that the average Italian pays 60% of their income in taxes whilst corporations pay maybe four. The practice may be legal, but begs questions around ethics, equity, and justice.

Tax havens serve as “offshore” financial centers. Referring to island nations, nations other than the home of an investing individual or company, the offshore location offers foreign individuals and businesses no or little tax liability in a politically and economically stable environment.  These locales are havens too because of the confidentiality promised to investors. The structure for this is relatively simple:  the haven nation will accept funds and assets from anywhere without reporting to any authority from the originating nation. In such havens, there’s no legal mechanism that would force disclosures.

“Shell companies” (AKA “front companies”) exist on paper. Ownership is disguised. There’s no physical location, no employees or operations, per se, though they own bank accounts, assets, real estate, and investments. Essentially operating above the law and hidden from public view, shell corps are the core of anonymous international business. Registered in countries other than where assets may actually be located, one shell company is owned by another and another and another, almost like Russian nesting dolls.

Tax havens are not just for criminals — obviously, multinational corporations (MNC) such as Amazon, AirBnB, and Apple use them, although a bit differently. It’s typical for an MNC to use creative accounting to claim less profits and more expenses to lower their tax bracket.  However, by registering a company’s headquarters or home address in a tax haven nation, the MNC is almost always able to get away with “tax avoidance,” which in contrast to “tax evasion,” is legal. To note, certain states in the US are considered tax havens too. It’s easy enough to purchase a shell company in states like Nevada, Wyoming, or Delaware, for example.


Violation of human rights

Private equity equates to anonymity and impunity; thus, the resultant challenge to tracking down actual persons. And so, these mysterious equity entities continue to find their way into housing markets around the world. This is not to say that all is with nefarious intent. Nevertheless, the very fact that housing — a basic human need and right decreed by international law and agreed to by 192 signatory nations — is financialized and exclusive to those of high-wealth is an egregious human rights violation. In almost any nation, these exploitative dealings affect the average person, whether they rent or own, defying the declaration that housing should be affordable and decent.

Whether for money laundering and tax evasion, or legal foreign investment, what’s being used as assets for the wealthy could otherwise be shelter for those in need of housing.  Take note of some figures as of December 2020 for perspective:  according to the UNHCR, there are 80+ million refugees worldwide, and as reported on the Make the Shift site, 150 million are homeless worldwide. As long as the push factors remain, those numbers will only continue to rise, further accentuating the point that homelessness is a violation of human rights.

To recap, foreign, absentee home and condo building ownership-investment in any city only benefits investors. Offshore private equity finance, for the most part, is not bound by any laws, is disruptive to local economies and democracies, and takes wasta to a whole new level.


What can be done?

A necessary first step, says Transparency International, is governance that’s willing to do its due diligence, and legislate and enforce policy at all legal and institutional levels. It requires transparency and democratic participation, as well as knowledgeable, attentive administration.  Loopholes in the global financial system that allow for the perpetuation of corruption schemes must be closed.  To this I would add the need for education, and strategic local community engagement and coalition-building that can connect to wider global campaigns such as those conducted by Transparency International.  Their aims to stop anonymous corporations (such as those that buy up housing), secret jurisdictions and “Golden Visas” that give free reign to foreign purchasers of large swaths of land and housing in other countries will gain greater momentum as more people understand what’s at issue.  Seeking international cooperation and intervention, Transparency International posits transnational information sharing, sanctions, supervision, and asset recovery to guarantee transparency and oversight, and to prevent the corrupt from enjoying the self-entitled privilege of financial havens for exploitatively or illegally gotten gain.

Arthur Doohan, banker turned activist and co-founder of ClampK, a political action nonprofit that advocates for regulation and laws for the transparency of offshore property ownership, particularly in the UK housing sector, exemplifies local efforts with global reach. His list of remedial actions to reduce money laundered proceeds from entering the residential housing market in the first place can be replicated in other places.  Similarly, Leilani Farha’s endeavors since stepping down as UN Special Rapporteur on Housing is through the global organization that she founded and directs, The Shift.  As well, she and filmmaker Fredrik Gertten continue investigations via their weekly podcast, PUSHBACK.



The irony for me is that as I write on “housing wasta,” I too am living the burn of an overheated housing market. My story began quite unoriginally in San Francisco where the rip-off cost of housing is common knowledge. My last apartment there was in a large complex owned and (barely) managed by the third largest equity real estate investment trust corporation (REIT) in the US. REITs are publicly traded, lavish high dividends upon shareholders, and are remiss at any semblance of genuine rental home management.

During the first stages of the pandemic lockdown in spring 2020, my REIT landlord abided by the government-issued eviction moratorium; but as soon as it lifted, raised already exorbitant rents even further. In the jurisdiction in which I was living — a landlord’s paradise — there exists no cap on rental increases. Exemplifying this fact, an elderly Haitian neighbor asked me to read a letter she’d received from the landlord, convinced that her French-to-English translation must be incorrect. Finding no misinterpretation on her part, we were stunned to realize that her rent was being jacked up by $500, starting the following month. Not having the means to pay the increase, her daughter provided a solution by folding her elderly mother into her household.

Not having such an option for myself, I turned to AirBnB in late summer 2020, which coincided with history-making fires in California in which over 10,000 homes, apartments and other properties were burnt to the ground, further compounding housing shortages and homelessness. And so when I found accommodations on the AirBnB app, it was all the more devastating to arrive at a “bait-and-switch.” As it turns out, the bait-and-switch is one of many scams common to AirBnB — a topic, I came to learn, covered by the likes of Vice News, Vox, Australian journalist, Asher Fergusson, and the PUSHBACK podcast.  Moreover, as tenant rights researcher Chelsea Kirk has pointed out, AirBnB has been responsible “for the removal of thousands of rental units from tight housing markets across the country and displaced people along the way.”

My own housing fiascos led me to the work of Farha and Gertten, making the issue of exploitation and corruption in housing is as personal as it is global.  And though wasta is the lens through which I viewed Push the film and focused my research, the information presented on private equity, offshore tax havens, and financialized housing affects millions. Journalist Robert Fisk once said that we don’t report facts to change the world, but as a means for ensuring that the guardrails of humanity remain intact. Saviano, the Italian journalist who lives under death threat for exposing facts, or any whistleblower who takes personal risk to take a stand for truth, lend themselves as societal safeguards. A journalist, filmmaker, or storyteller doesn’t report sheerly by logic, or void of human emotion. To do it well, concern for the subject matter is prerequisite. That Farha and Gertten care deeply about the global housing crisis potentizes their work, as well as provides validation for my ongoing experiences.

No matter how virtual and online lives can be lived in 2021, navigating society without a proper address is a test of endurance. Friends have attempted to put a positive spin on my untethered situation, saying, “you’re free as a bird!”  But even a bird has its nest.  The unreconcilable twist is that I’m a professional with advanced degrees and loads of work experience in the field of human rights and social justice; and it doesn’t matter. In a statusizing world that commodifies human needs and rights, eliminates societal guardrails, and prizes wasta, it’s too easy to slip through the cracks.

Neoliberal rhetoric, financialized housing notwithstanding, would castigate us as unfit to control our own destinies, to hold liable individuals for societal and global failures, and to instigate distrust of one another.  The neoliberal system is one that accords value and power to those with means, no matter how they’ve acquired it.  It’s a system in which private equity flourishes, if not for these interventionistic conversations.  It’s also a system that operates outside the human rights framework, which is the heart of the matter. Stream Push the film online and join the conversation.


Mischa Geracoulis is a journalist and editor who serves as contributing editor at The Markaz Review, and on the editorial board of the Censored Press. Her work is positioned at the intersection of critical media and information literacy, human rights education, and democracy and ethics. The subject matter of her research topics include the Armenian Genocide and diaspora, truth in reporting, press and academic freedoms, identity and culture, and the multifaceted human condition. Mischa’s work has appeared in Middle East Eye, openDemocracy, Truthout, The Guardian, LA Review of Books, Colorlines, Gomidas Institute, and National Catholic Reporter, among others. She Tweets @MGeracoulis.

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