It is really tough to be a real estate commentator these days.
I have been writing about real estate issues for almost thirty years and rarely have I experienced periods of such turmoil and chaos:
1. A magnitude of housing price declines unlike anything we have seen since the Great Depression.
2. Credit losses that could cost U.S. financial institutions over One Trillion Dollars.
3. Government sponsored entities (Fannie and Freddie) that actually require government sponsored assistance.
4. Estimates that as many as 5 million U.S. homeowners (maybe 7% of total homeowners) could lose their homes to foreclosure.
5. An amazing array of suggestions for preventing future housing and credit-related problems - ranging from the ridiculous to the sublime.
It is this last point that I would like to discuss today -- suggestions for preventing another mess like the present one. Let me state my bias up front: we as a society swing from too little to too much all the time. We rush in when the horse is out of the barn and then we invent twenty new ways to keep the horse in the barn when a simple policy of closing the barn down would work fine.
Some of the ideas for improving our housing and financial system are substantive. Some make me laugh. For example, many academics say that we need more disclosure laws and forms. Now, as an attorney who has handled about 5,000 closings I can state assuredly that disclosure forms are not the answer. The fact is that in the heat and pressure of the pre-closing and closing processes no one pays attention to disclosures. All disclosures are good for is preventing lawsuits - so that someone can't say "You never told me that."
I could rant on about disclosures and other suggestions but what I really need to do is come up with some solutions of my own.
And here is my Number One Proposal:
Make FINANCIAL LITERACY a required course in every United States high school and university.
It is ridiculous that high schoolers graduate with the ability to vote and serve in the military and participate in all sorts of other activities and yet do not have the most basic understanding of the important financial principles that will impact their lives.
I am not aware of any high school or college course on Financial Literacy. Young people enter the world with no clue as to what a mortgage is, the meaning of amortization or the point of liability insurance. FICO score? What's that? The risks of credit cards? Just increase my limit...
We as a society are doing our young people a disservice. We need products and programs that will prepare young adults for the real world. Only when we increase the street smarts and financial literacy of our next generations will we prepare ourselves for future messes. The fact is that there will always be opportunities to dig a hole for ourselves - whether it is the tech-stock boom and bust, the housing boom and bust or a Tulip craze.
What we can do is help prepare those who will inherit our earth to recognize and deal with these opportunities and risks - in a better fashion than we did.
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Neither increasing nor decreasing exports will correct it.
Neither more nor less spending will correct it.
Neither full employment nor less than full employment will correct it.
Changing interest rates will not correct it.
Changing tax rates will not correct it.
The only thing that will correct it is the one thing that is a sacrosanct non-subject in media, education, politics, religion, and even social discourse.
The only thing that will correct it is to strip banks of their power to create their money as debt at interest and adopt a method of money creation whereby the U. S. Treasury creates our money as CREDIT
This issue is the key issue in the financial future of our nation and world!
This FRAUDULENT money mechanism is utilized throughout the world and is destroying nations, communities, families, and individuals right before our eyes!
We must turn an entrenched, centuries old financial establishment on its ear!
READ ABOUT IT.
STUDY IT.
UNDERSTAND IT.
TALK ABOUT IT.
THEN RAISE SOME HELL!
By Muriel E. Mobley, writing on 'The Money Question'.
"If we divide the total money of the nation by the total population of the nation we conclude that there is about $21,500 for each person.
This sounds like plenty of money for everyone. Unfortunately, there is about $58,000 of debt for every person.
Apply your $21,500 to the debt and $37,500(6) of debt would remain. Your options are forfeiture of assets or borrow more money.
Can you borrow yourself out of debt? You cannot!
Since the average person only deals with money after it has been created, perhaps it is not surprising that the cause of the ever increasing debt is not widely perceived.
But it must be widely perceived before there is any hope of correcting it.
Since the established mechanism of money creation and un-creation is itself the cause of ever increasing debt, it is not possible to correct the debt problem using any method that deals with money after it has been created.
Working harder or longer will not correct it.
Having a job for everyone will not correct it.
Neither raising nor lowering wages will correct it.
Neither greater nor lesser utilization of natural resources will correct it.
(cont'd)
But I don't view it as a substitute for responsible regulation.
At least on some points.
I am not so sure about the disclosure "forms" per se, not being a litigator, but I would be really interested in seeing what types of information would have to be disclosed.
That just might make the form worthwhile, to some of us non-litigators.
But, on the matter of financial literacy, absolutely, by all means, this should be a natural.
Not ramming it down anybody's throat.
Just making the information infinitely and freely available.
You know, a financial library card.
That should just about do it.
Let's start here.
Teaching about financial things.
Like money.
It would be good for people to have a solid understanding of the system of money that runs the financial markets and all other markets.
Without an understanding of the money-creation system that runs and grows our economy, many routine and mechanical activities of the market system would be somewhat abstract.
How, exactly, is new money created?
And, by whom?
And, why?
And, what are the options?
The monetary side of the financial system is more of a source of power than any other aspect of any markets that exists.
There is a political imperative that the people understand both the mechanics and the politics of money creation.
It is well understood by the bankers.
Monetary Transformation Now.
Yes, we need to teach what they need in the real world. They need to learn to type earlier because the young kids are learning the keys when playing games and that is going to mess them up. It would be fun to have stock classes.
They should gather the job requirements of companies, then teach them.
Some may not want us too smart though. How would they take advantage of us?
It shouldn't be we have to give up one class to have another.
We need to know more about other countries too. I we realized they are humans too, maybe genocide would stop happening.
My degree in history has not earned me even one cent, but has increased the enjoyment of my time in this world immeasurably. My engineering degree makes me money, but I cannot say I enjoy the work very much.
And while I am not a millionaire, I did very well until this admin started destroying the value of the dollar and instituting policies that are flushing the US economy down the commode.
Of course some basics of banking such as how much does a bank actually have to have to make a loan should be required too.
Balancing checkbooks is so unimportant compared to learning how to pay yourself first. Life skills and basic economic survival information. Parents should teach them where schools don't.
Good idea!
In Utah, the General Financial Literacy high school graduation requirement becomes effective with
the graduating class of 2008 (Board Rule R277-700-6-C. (9).
This is a great class. My daughter took it her sophmore year in 2006.
The General Financial Literacy .5 required core course, approved by the Utah State Board
of Education in June 2004, has four standards which cover decision making and goals,
income and careers, principles of money management, and savings, investing, and
retirement planning.
My favorite is the difference between a mortgage and a deed of trust, who the players are, and why one document is western and the other eastern.
(the subprime "paper" is widely flawed and would constitute the largest class action suit in history... if there were only attorneys who cared and/or borrowers who knew!)
The privileged and the financially educated know how to manipulate the market, and know how to avoid becoming casualties to its vagaries. If everyone was educated on a general level about the way things work, it would be much harder for bad actors to influence legislation that is beneficial to them, but detrimental to the average person.
If everyone had a basic understanding of how markets move and can be manipulated, it is doubtful that swindles such as that perpetrated by Enron and others would have reached the level they did, with millions more understanding and suspicious eyes on their operations.
The less people know about these issues, the more scope those with criminal intent have to game the system.