So I've been listening to the talk radio show hosts and guess what they're all talking about?
That's right, the housing debacle.
And not that I'm criticizing them, or belittling them, but they're talking about this as if it is something new and shocking. That the collapse of Wall Street just kind of "sprung up" on them. Again, its because I had the "advantage" of working in banking and saw this coming, but I kind of analogize it to being in the 101st Airborne during the Battle of Bastogne and then getting relieved by the Third Army and having them ask "So, what's going on?"
I want to yell back at them, "WHERE THE HELL HAVE YOU BEEN?!"
Regardless, the timing of this housing/banking debacle more or less mandates that I address something about how to prevent this in the future (and coincidentally publish a very appropriately time excerpt from my book). The premise being;
Would this have even have happened if we mandated personal financial management classes in school instead of worthless subjects like "psychology" or "foreign-languages-you'll-never-use."
But of all the recommended courses of action, the single best thing to prevent another housing crash or any other economic catastrophe from happening ever again is quite simply education. People do not realize how powerful and what the potential is for a nation that adequately educates its population in finance and economics. Not only would such debacles like the housing crisis be avoided, but bankruptcies would dramatically decline, debt levels would drop, crime would plummet, unemployment would be perpetually low, standards of living would jump to levels never dreamed possible, and recessions, just like Polio or the measles, would be eradicated. It is merely a question of whether we care to eradicate the ignorance that causes these ills. It is a question of whether a society is willing to be intellectually honest enough to abandon the Thin Skinned Economy, take the time to study economics and live in the real world.
Not that we don’t make some efforts to educate ourselves when it comes to economics and finance, but it is an absolute disgrace the poor job today’s education system does. If at all, economics is a token requirement usually taught by a history teacher with no real background or understanding in economics and finance. Worse still anybody with real world experience is prohibited from teaching in the public schools on the flimsy grounds they don’t have a “teacher’s license” (Alan Greenspan himself could not teach economics at the majority of our schools). Furthermore, as no doubt has been the majority of people’s experiences, economics was such a boring class that instead of embracing it, it was loathed and feared by millions of high school students. It is no coincidence Ben Stein’s accurate depiction of an economics teacher in “Ferris Bueller’s Day Off” resonates so well with society.
This is just as much as a tragedy as the housing crisis itself, for in failing to educate the masses in finance and economics, we have failed to educate ourselves on one the most important, if not the most important aspect of our lives. Furthermore, it is almost criminal because the costs of such ignorance are so severe. Had personal financial management been taught in the schools would the sub prime market even exist? Would most 25 year olds have credit card bills larger than their student loans? Would there even be a housing crisis? Would the Baby Boomer generation be so woefully unprepared for retirement? Blame the bankers, blame the brokers, the utter failure of the education system to instill any semblance of fiscal discipline is just as much to blame...."
There's more where that came from.