Well, here's the rub for me.
I do get the basic day-to-day financial stuff. Ten years ago, I not only asked my acquaintances how the hell they thought they could afford a silk purse home on a pigs ear salary... I also secretly made a habit of stopping off occassionally at the balloon-flying, banner waving preconstruction sale sites and explaining the nuts and bolts meaning of balloon mortgages to the people standing in line. I can honestlly say that, of the hundreds of people I "educated", only one person followed my advice and that was my husband - who had other motivations. Universally, the response I got from folks was that yes, they understood my message, but the short term reinforcer far outweighed the long term consequences.
Since I am not a financial wizard, a few weeks ago I had a little spare time and I thought, oh what the heck, maybe I should learn a little about the whole AIG thing. YIKES! Forget about peeling an onion, this is like peeling the universe! I was doing okay on the greedy insurance policies, the bank rating system manipulation, the astounding leverage amounts ....heck, I was even hanging in there on things like the decimation of Iceland. But, then when i realized that, hell yeah AIG is holding us hostage and -even better- they can! On to international trade agreements and how we need a bad guy because we need to keep trading with all those nations we have agreements with. So,China is elected to be the bad guy ...oh yeah, pay attention, because their election as bad guy actually began a few years ago through selective media presentation. Could it really be that China has all the toxic paint and meds? So, from there I took a peek at things that had been restricted for import from other nations .....uh oh
Before my brain melts, I am going to stop this little financial sel-education and go back to figuring out quantum physics and why gravity is not really what is holding us to the earth.
P.S. I have been known to read Mad magazine also.
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Dollars and Sense
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What's a nation to do? It might be helpful if parents talked Econ 101 with their kids, but it turns out that, like sex, most prefer teenagers to learn about investing elsewhere. Apparently their friends tell them this: just use plastic. A 2007 study by Sallie Mae showed that more than half of college students had run up in excess of $5,000 in credit-card debt while in school, and a third had more than $10,000.
So now certain states are mandating finance courses in high school. Some researchers argue that none of that does much good, but let's hear a shout-out anyhow for the teacher in Oregon who showed her students how much an item really costs if you put it on a Visa card and don't pay the full balance immediately. (For extra credit: do you know how much the rate is on your credit cards right now?)
It's easy to rail against the gatekeepers, against the ineptitude of the Securities and Exchange Commission and the uselessness of the ratings agencies that lauded corporations now on the skids. (It's also easy to give this common-sense advice to captains of industry: no office redecoration has to cost more than a starter home.) The operative mode at the moment for describing those who lost all their money in Madoff's Ponzi scheme is "victim." But it's axiomatic that one easy way to be victimized is not to ask the right questions.
Americans have given up understanding much of what passes for daily life. It was no accident that, 20 years ago, a book called "The Way Things Work" stayed on the bestseller list for a year. No one knows the way things work anymore; their houses flood because they don't know where the cutoff valve for the water is.
But there's also a precedent for assuming control, even of complex issues. Look at the way many Americans deal with health care today compared with a generation ago. Once doctors, like financial managers, were seen as keepers of a mysterious flame and patients as people who should simply do what they were told. Today many more patients think of themselves as partners and work hard to educate themselves about their health and their ailments before having surgery or taking medications.
I keep remembering a time, 30 years ago, when I was assigned a feature story about a bar that served Wall Street workers. Desperate, I went to a business reporter and told him I needed a tutorial because I really didn't understand the stock market. He burst out laughing, and when I cringed, he quickly said, "Half of the people in this newsroom don't understand it, either. But none of them would admit it." Sometimes the most useful thing you can do is admit what you don't know, because what you don't know will hurt you. By all means, trash AIG. But it would be best if you understood exactly what they'd done in the first place.
© 2009
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