What he said!
See, somebody agrees with me. And he has a PhD in econ and everything...
See, somebody agrees with me. And he has a PhD in econ and everything...
I would love to see a housing bailout bill that refinanced loans for primary homeowners who are in homes at high-rate ARMs that they could actually afford with a 30-year-fixed at, say, 5-6%. Cuts down on foreclosures, but doesn't waste money on hopeless cases or reward speculation.
But the Senate just stripped that out of their "housing relief package"! Luckily, "forty percent of the cost of the bill will fund a business tax break expected to help homebuilders." Yay! Anything in the name of preserving jobs.
Unbelievable.
One of my favorite non-pf blogs is Confessions of a Community College Dean. Dean Dad always provides such caring and thoughtful insights into academia, especially the underfunded, non-sexy world of community college. The topic of his most recent post is especially interesting: students who register for classes they have no intention of taking so that they can stay on their parents' health insurance.
But there's something fundamentally wrong with a system that rewards people taking that extra class just to get the insurance. I don't entirely blame them for doing it – they've found a loophole in a ridiculously unfair system – but it certainly distorts what we're trying to do. These folks show up in our attrition numbers, our outcomes assessments, and our (non)-graduation rates, all of which get blamed on us. And they get lower GPA's than they probably ought, simply from spreading themselves unrealistically thin.
Unsurprisingly, there was a piece on the real estate crisis on '60 Minutes' tonight. But I was interested to see an angle that I've always felt but rarely articulate because it makes me feel like I sound like a complete jerk. But here it is:
Why is it so tragic that so many people are losing their homes?
Certainly, it used to be tragic when someone lost a home. But why was that? The tragedy was that the family had been there for quite some time, and that they were losing their down-payment and the equity they'd built.
But if the people losing their homes are primarily recipients of no-downpayment mortgages on which they were never paying enough to actually pay off the loan (e.g. either interest only or ARMs they couldn't possibly afford once they reset): is losing their home tragic? While it's certainly a pain to have to move, they've likely spent a couple of years in a home paying far less than they would have had to pay rent on a comparable home. And if they pulled "equity" out of the home, they might have even made money on the whole experience.
And, you know, I'm not angry at these people. I'm really not. I think the banks are as much to blame. McMansions an hour's commute from work aren't really my bag, anyway.
But I certainly don't think it's tragic.
I don't have time to read this paper today, so for now it's strictly in the "humor" category:
Or the purchase of an absurdly large house could signal entrenchment: The CEO is too comfortable with his position and his personal finances. He has made so much money that he can't really be bothered with running the company. And the willingness to spend gazillions on a house—not to mention the furnishings, artwork, and baubles to fill it—betokens a general inattentiveness to costs. In which case, you'd expect stocks of the companies where the CEO just bought an obscenely large house to fare poorly. Sell!
This month's Atlantic has a great story: Global Warming: Who Loses—and Who Wins? That link is subscribers only so I'm assuming most people can't read it, but the story is primarily about global warming not just from an ecological but also a financial perspective. What cities will become barren and uninhabitable (his vote: Phoenix)? What currently undesirable regions will become temperate paradises (Siberia)?
He claims that, ecological and probability of great-great-grandchildren affording potable water aside, Greenlanders celebrate the melting of glaciers there because it means their property values are increasing.
So why shouldn't all the people who acknowledge global warming take advantage of this? Create the "Apocalypse Fund", and let the obstinate ones get left behind financially. Sure, it's crass and opportunistic, but hell, it's happening anyway and I want to make sure my great-great-grandchildren can afford potable water when it's $100/gallon.
The "Freakonomics" blog has a great post on information asymmetry and commodities:
Those aren’t typos. Walgreens charges $117 for a bottle of the same pills for which Costco charges $12.
I was skeptical at first. Why on earth, I asked Wolf, would anyone in his right mind fill his generic prescription at Walgreen’s instead of Costco?
His answer: if a retiree is used to filling his prescriptions at Walgreens, that’s where he fills his prescriptions — and he assumes that the price of a generic drug (or, perhaps, any drug) is pretty much the same at any pharmacy. Talk about information asymmetry; talk about price discrimination.
It's funny. Awhile ago my employer sent out a brochure on ways to save them money on heath care. Some were obvious -- "please don't make frivolous doctor's appointments!" Some were laughable -- "If you buy analgesics over the counter, it saves us money!" Yes, me paying for a product that I have prescription insurance for would save my insurer money.
However, one thing I might be willing to do, within reason, is shop at whatever pharmacy charges my insurer the least. But I don't want to assume that the retailer with the cheapest out-of-pocket cost also charges insurers the least, too.
I generally love my PBS station. There's an outstanding local daily news/magazine program. There's Nova, Washington Week, NOW, American Experience, Frontline, Rick Steves, and, of course, Mystery!
Except during pledge week. Within the space of three days, during prime time our affiliate is showing:
Huh?
This is about more than my personal preferences: it just doesn't make financial sense to me! Remember, the pledge drive is supposed to encourage people to open their wallets. But there seems to be such a disconnect between people who might enjoy normal programming and people who relish the pledge drive programming.
Wouldn't the regular viewers just tune out during these couple of weeks? (And I don't just mean because of the pledge drive interruptions -- I don't mind those, really, if it's during programming that I enjoy.)
And wouldn't the people who really, really love "Andrea Bocelli: A Night in Tuscany" generally dislike the programming the rest of the year, and therefore have no desire to shell out $100?
This story reports on two research projects suggesting that "today's college students are more narcissistic and self-centered than their predecessors". The first is focused on the "Narcissistic Personality Inventory" and compares college students of 1982 to those of 2006.
The researchers traced the phenomenon back to what they called the "self-esteem movement" that emerged in the 1980s, asserting that the effort to build self-confidence had gone too far.
As an example, Twenge cited a song commonly sung to the tune of "Frere Jacques" in preschool: "I am special, I am special. Look at me."
"Current technology fuels the increase in narcissism," Twenge said. "By its very name, MySpace encourages attention-seeking, as does YouTube."
The second study, out of UCLA, "found that nearly three-quarters of the freshmen it surveyed thought it was important to be "very well-off financially." That compared with 62.5 percent who said the same in 1980 and 42 percent in 1966."
What to think of this? I spend every day on a college campus, and there are massive differences between the undergrads here and the undergrads at my school eight to ten years ago. Mostly I'm shocked by how much time and money they apparently have to dedicate to their appearance, and I'm not just talking about the women -- the guys, too, are fond of outfits that just reek of effort. However, this could be for a variety of factors -- difference in location of the two schools, of wealth of the student body, the particular mores of the campus, difference in distribution of majors, etc. -- that have nothing to do with a widespread change in the behavior of college students.
The second study, though, I think might be making an unfair inference about young adults today. We're a generation that has seen the very public erosion of entitlements and traditional safety nets. Pension promises are being denied right and left. Enron. The hysteria about Social Security's longevity.
So, yes, I think it's very important to be well-off. Not because I have some mindless desire to be wealthy, but because I can't trust anyone else -- the government, a corporation I give a lifetime of work to -- to keep its promises to me.
Am I the only one who refuses to look at her retirement account? I'm usually the type to check TIAA-CREF several times a week (which, yes, I know is stupid) but I'm just not gonna look for the next few weeks.
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