Michael Lewis on five reasons we can give thanks for the financial meltdown of the decade
Our willingness to believe that we can hire some expert to tell us how to outperform markets is a big problem, with big consequences. It underpins Wall Street’s brokerage operations, for instance, and leads to a lot more people giving out financial advice than should be giving out financial advice.
Thanks to the current panic many Americans have learned that the experts who advise them what to do with their savings are, at best, fools. Merrill Lynch & Co., Morgan Stanley, Citigroup Inc. and all the rest persuaded their most valuable customers to buy auction-rate bonds, telling them the securities were as good as cash.
> 4) We have lots of new houses.
When 10 percent of the homes are in foreclosure, that means that 90 percent are not in foreclosure.
Lots of people who otherwise would not get a home of their own finally got a chance and made good on that chance. Even if you are upside down on your mortgage, you still have to live somewhere. It’s not a case of comparing a house payment to zero, you really compare a house pament to apartment rent. If you pay $1000 for a mortgage, it’s still (in the US) mostly deductabile. It pencils out to the equivalent of $800 apartment rent.
In five years, you will be “right side up”, and will have the benefit of a home – probably a better school for your kid, etc.