Author Topic: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.  (Read 5436 times)

LongHaul

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #30 on: September 22, 2018, 08:03:12 AM »
ponsibility, but most people absorb the lessons they I read the papers you linked to.  Although the New America paper is based on only 59 focus group participants, I think it's more interesting and suggests many causes, including immaturity, financial illiteracy and low agency.  For example, look at all the quotes suggesting that borrowers had no idea what their monthly payments would be or didn't know that they'd have to payback the loans if they didn't get a degree.  Similarly, the apparent total befuddlement about IBR, even after it was explained, is both sad and frightening.

I have no evidence to support it, but I continue to believe that we could address some of the problem by having mandatory basic financial literacy education in high school.  For example, with an internet connection, a graduating high school student about to take out significant loans to attend college should be able to figure out (i) the expected monthly payments on student loans at graduation; (ii) expected rent in the city they want to live in; (iii) a rough estimate of additional living expenses (car, food, etc.) and taxes; and (iv) whether all of those expenses are greater than or less than a reasonable estimate of the starting salary in their hoped for profession.  I don't actually expect most 17 and 18 year olds to do that on their own.  But if they were forced to do it as part of a graded financial literacy class, it would hopefully open their eyes up to what they're getting themselves into.  Along the way, they'd learn many useful pieces of financial knowledge, e.g., the effects of compound interest, amortization tables, the actual impact of payroll and income taxes, the actual cost of renting an apartment, etc.

Not sure if formal teaching with an elaborate curriculum is the way to go or if only some kind of online simplified program could do the trick. Perhaps an even more targeted approach (cost effective) may help.

Just for awareness of potential evidence, there seem to be green shoots.
https://www.inceptia.org/PDF/Inceptia_LoanSummary_Whitepaper.pdf
https://www.in.gov/che/files/150722_PressRelease_TruthInBorrowing.pdf
https://www.in.gov/che/files/Loan_Disclosure_Template_for_Mail_Merge.pdf

A simple annual "reminder" seems to "nudge" people in the right direction.
A bit sad that we may need "programs" to help people helping themselves but the principle of secondary prevention is to minimize the impact of a disease once you have it. Obviously primary prevention is better but democracies are not perfect.

I think a class and other nudges and good ideas probably would help a bit on the margin.  BUT as I have gotten older and have seen how people make their financial decision there is a ton of stupidity, emotion and laziness involved and I think 95% of it doesn't have to do with knowledge but really emotional discipline to defer gratification.

The internet has often 50x the amount of information you need all you have to do it look it up to make prudent decisions but people still don't use to to learn and save.  Such is life... I'll bet it will never change and I just expect it.  Sorry to sound defeatist but I think it is largely realistic.


Gregmal

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #31 on: September 22, 2018, 08:42:25 AM »
My thoughts have always been that coming of age during the financial crisis would be a blessing. You basically get into things on a generational reset. Housing prices are cheap, employment would start out challenging but be in expansion for for the next 10-20 years, and more importantly, you'd have fresh in your mind the lessons learned by others during the GFC. I never thought it would be an excuse.

John Hjorth

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #32 on: September 22, 2018, 08:43:12 AM »
... As soon as he stops externalizing blame he might turn into anything else than a screw-up. I doubt he ever will.

That's actually also the really hard part. To recognize and derive, by analysis of your own actions in the clear rear mirror, that you were not wise, nor smart, perhaps even silly, or just a plain idiot. Over that hurdle, it usually gets easier along the way, depending of to which degree one has screwed up.

I've been there about ten years ago [and have posted about it here on CoBF], done that & got that [selfimposed] "Idiot!"-shirt.

- - - o 0 o - - -

The moral hazard dimension of the GFC has been discussed at great length in a series videos produced by CNBC recently - interviews with some of the key players about the wild days  - about 15 minutes each - among them Mr. Buffett.
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wachtwoord

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #33 on: September 22, 2018, 09:49:34 AM »
Is it that hard really? I basically have always done this, even as a child. How can you expect to do better for yourself if you don't analyze what you (you, not someone else) do wrong in order to avoid it in the future? Why do you think you deserve anything whatsoever?

I think people (and millenials particular, which apparently I officially just fall into as well) are just too damn soft on themselves. I've always been far more strict on myself than anyone else and alled myself an idiot on many occasions.

I don't think that's hard. That's not being a pussy.

Btw:
As far as it wasn't clear, this wasn't meant at you John. You're clearly open to questioning your own failing and looking to learn from them :)
« Last Edit: September 22, 2018, 09:51:12 AM by wachtwoord »
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

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Cigarbutt

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #34 on: September 22, 2018, 10:20:36 AM »
I think a class and other nudges and good ideas probably would help a bit on the margin.  BUT as I have gotten older and have seen how people make their financial decision there is a ton of stupidity, emotion and laziness involved and I think 95% of it doesn't have to do with knowledge but really emotional discipline to defer gratification.

The internet has often 50x the amount of information you need all you have to do it look it up to make prudent decisions but people still don't use to to learn and save.  Such is life... I'll bet it will never change and I just expect it.  Sorry to sound defeatist but I think it is largely realistic.

Fair enough. Helpful to remember however that, if people were rational at all times, value investing would be much less fun. :)
Still painful to watch an upcoming train wreck, even with apparent slow motion.

Is it that hard really? I basically have always done this, even as a child. How can you expect to do better for yourself if you don't analyze what you (you, not someone else) do wrong in order to avoid it in the future? Why do you think you deserve anything whatsoever?

I think people (and millenials particular, which apparently I officially just fall into as well) are just too damn soft on themselves. I've always been far more strict on myself than anyone else and alled myself an idiot on many occasions.

I don't think that's hard. That's not being a pussy.

Good for you.
Anecdotally (but maybe typical of what is happening in the education systems of developed countries?), earlier this week, I went for the meeting with the teacher to start the school year (6th grade). The teacher seemed to be dedicated and competent but spent about half of her presentation on the importance of student self-esteem and how the inner voice is an enemy.
I agree with you that one should make his or her inner voice an ally but, in my humble experience, the strength and purpose of the inner voice tends to be inversely proportional to the inner score card strength.

The combination that both John and you show appears to be rare.

flesh

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #35 on: September 22, 2018, 10:47:07 AM »
1. Let the private market in. Someone with the right tools needs to measure. If it was
ubiquitous that all earnings from nearly all colleges were tracked by major in real time complete with analyses/predictions things would change. Skin in the game. Nobody would have to let other's pay for their school it would be optional. You could have caps, 10% of earnings over 20 years max, whatever. This would minimize debt, maximize real ROI's and solve most of the problems. Let the market get the real data. Let it price what x degree will be worth in the future. Let everyone have access to the pricing for free. Let it be known. This would reduce college cost as well. There would be fewer people engaging in the majors that aren't needed/don't pay and more where we need them. If I'm thinking about journalism as a major and it's 100k and I notice if I go into stem, it's free and they get 10% of my pay for 20 years, some of us will go into stem. Those of use who are very poor who are capable are even more likely to go into stem or whatever is going to be needed next 20 years.

2. Free college privately paid for, likely non accredited initially but worth something, like a ged to a high school diploma. A mainly online university free to everyone in the usa wouldn't cost much, 10's of M's/year perhaps. Some involved would work for free, some would take less pay, anyone with internet could complete a degree. If it wasn't accredited initially, it would have some market value signaling whatever the average of the graduates value vs say a state school or community college. It would prove 100's of hours worked at a college level difficulty, this would be enough for many. I believe there would be enough private funding. Over time as it's value was quantified, more would come, less would pay high prices for regular college and college prices would come down as they were forced to be more efficient. Obviously this would work in some subjects and not others. More undergrad. I believe we'd see many educating themselves later in life whether needed or not, everyone would be smarter.

3. At least, put a cap on the period before a bk can wipe away the loans. 15 years, whatever. Once this is priced in down goes college prices.




wachtwoord

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #36 on: September 22, 2018, 11:12:57 AM »

I agree with you that one should make his or her inner voice an ally but, in my humble experience, the strength and purpose of the inner voice tends to be inversely proportional to the inner score card strength.

The combination that both John and you show appears to be rare.

Am I understanding correctly that you believe in general more intelligent people are weaker and less intelligent people are stronger?

If so, I think it has more to do with lack of adversity and competition in the western world. It indeed starts with the education system which is weak as hell (grading "on a scale" is terrible). In non-western countries it's normal to show who is best of the class, second best etc. In Europe they try to hide it ...

I guess I'm "lucky" in the sense that I didn't need to grow up in adverse situations (safe middle class stable family) while most people do need this?
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

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RichardGibbons

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #37 on: September 22, 2018, 12:35:02 PM »
If so, I think it has more to do with lack of adversity and competition in the western world. It indeed starts with the education system which is weak as hell (grading "on a scale" is terrible). In non-western countries it's normal to show who is best of the class, second best etc. In Europe they try to hide it ...

I guess I'm "lucky" in the sense that I didn't need to grow up in adverse situations (safe middle class stable family) while most people do need this?

Well, or it could be that your hypothesis is bogus and related to your biases rather than evidence.

Like, you're implying that the people who grow in tough, non-western countries are likely to be more successful because of those challenges. Yet, western countries composed of people with this soft western upbringing have brought about a situation where the west is the dominant economic force (and probably cultural force) on earth. So, to me, it seems hasty to imply that the western way is horrible, and the methods of less successful countries are preferable.

John Hjorth

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #38 on: September 22, 2018, 12:45:28 PM »
Many [many! [ : - ) ]] years ago, I had a GF ... - I was so crazy about her, and so in love with her! - who once said to me: "I guess, I just started getting put on the pot tilted ...", when I had serious discussions with her about her doings, that I from time to time simply coulden't accept.

It all boils down to, that you have to take on responsibily for your own life - in all aspects, combined with the understanding & application of some quite simple, but very important basic rules of how to live your life, if you want to live without financial concerns.

I think all the posts from Cigarbutt in this topic so far, and the deep line of thinking behind those posts, is exactly a mirror of that particular line of thinking.
« Last Edit: September 22, 2018, 12:48:14 PM by John Hjorth »
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wachtwoord

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Re: I Came of Age During the 2008 Financial Crisis. I知 Still Angry About It.
« Reply #39 on: September 22, 2018, 01:50:09 PM »
If so, I think it has more to do with lack of adversity and competition in the western world. It indeed starts with the education system which is weak as hell (grading "on a scale" is terrible). In non-western countries it's normal to show who is best of the class, second best etc. In Europe they try to hide it ...

I guess I'm "lucky" in the sense that I didn't need to grow up in adverse situations (safe middle class stable family) while most people do need this?

Well, or it could be that your hypothesis is bogus and related to your biases rather than evidence.

Like, you're implying that the people who grow in tough, non-western countries are likely to be more successful because of those challenges. Yet, western countries composed of people with this soft western upbringing have brought about a situation where the west is the dominant economic force (and probably cultural force) on earth. So, to me, it seems hasty to imply that the western way is horrible, and the methods of less successful countries are preferable.

Why do you think the problem lies mainly with the latest generations? (1950s onwards, the later the worse it got). It seems like societal hubris. Like a late stage Roman empire.

Even though I came in contact with many more non-western people than the average person that lives in the west, of course my sample size can never be large enough to draw any sort of significant conclusion and everything is anecdotal in nature. I also didn't say they are more successful ;)
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

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