Finally, real estate risk management devices. Values of homes go up and down a lot and people are not protected against these fluctuations and this is bizarre to me. We have home insurance, casualty insurance that protects you against accidents in your home or you get protection against fires so why not protect them against the big risk, which is the change in value of your home. Are people who do things like short the financial markets good people or bad people? Shorting, is it evil to short a market? Well, if you're shorting a market for homes in your own city, you're just trying to protect yourself against the collapse. It's not so evil. If you're doing it to make billions of dollars it's a little bit ambiguous, your moral stance. But anyway it's legal, you can short markets and I thought it would be a good thing if people could short the housing market. It would help stop bubbles and it would help people protect themselves against this. There could also be a source of risk management for equity protected mortgages. You should have a mortgage that tells you when you buy a house, if your home price falls below the amount you owe, we'll correct your debt downward. Isn't that sensible? But that's not what we did, not what we are doing. If you buy a house for $500,000, you borrow $450,000, the price of the house falls to 400,000, you are now $50,000 underwater. You go into your mortgage lender and you say, "I'm underwater. What do we do? " And the mortgage lender will typically say, "Tough luck, we'll sue you. We'l go after you if you don't pay?" Why do we leave it like that? Well, it's because progress is slow. When you talk a lot about financial innovations is there anything of recent that is really credit for you or that you think it's, kind of, the next frontier of finance? There are many innovations. I don't know where to begin. Well, but let me put it this way that most of our risks are still not managed well, for example, your home price risk. That is borne by you, the homeowner. I actually work with the Chicago Mercantile Exchange and we do have a futures market for single, and an options market, for single family homes so that you can buy a put option on your house to protect you against the big fall. That is up and running. I want to see it grow and get more more active but it is, it does exist. Another risk which is even bigger is the risk of your human capital that you are investing in now as a student. And now, you are an MBA student so you have chosen a very fungible form of human capital management. That has to be a very versatile skill that right, at least that sounds like it to me, that won't be replaced by a computer. Now, it might be partly replaced by computers, in fact, it already has partly been replaced, I think. But, I think, that's, but the question is, what if you pick a human capital that is more focused, like nuclear engineering. Now you could, how can you protect yourself against that risk to your human capital? Well, I have an idea how you could do it. You could short the stock of a nuclear power company, assume that it's going to correlate negatively with your risk, so you can sort of do it. But I think there are other things that might be more appropriate for most people. I think that's kind of requires some sophistication to pick a company and short it to protect yourself, your own human capital. President Obama in his State of the Union address for 2016 proposed wage insurance that when people lose their job and switch to a permanent job with a lower wage, there should be some pay out that would, insurance pay off for the loss of livelihood. I've advocated things like that, too, in my writings. I call it livelihood insurance. But I can keep coming up with there's so many innovations and we don't know which ones, but what we do know is that risk is not well-managed worldwide. And we also know that enterprises are not functioning well everywhere, that there are many places in the world where free enterprise and entrepreneurship seems limited, so there's a lot of things to be innovated.
