As is dictated by widely-held Man Laws, I enjoy sports. But usually I don't find much at ESPN.com that stokes my financial interest. This column by Rick Reilly, though, is fun:
Well, as "fun" as financial meltdown can be, I guess. As Reilly tells us:
Filing for bankruptcy is a long-standing tradition for NBA players, 60% of whom, according to the Toronto Star, are broke five years after they retire.
I did a minimum of research and discovered that what makes this "60% go broke" stat so particularly nifty is that, according to InsideHoops, the NBA's minimum salary for the 2008-09 season will be roughly $442k. Not exactly bread-n-water money.
But let's be truthful here: How many guys who make the leap into the NBA (or the NFL, or MLBA, or whatever) were good with money before they got there? Instinct tells me very few. If you've sucked with money all your young life, and then come into a lot of it ... well, not much changes. You just have more money to suck with.
Once these pro athletes step up to the financial 3-point line, there's an entire world of agents, marketers, and family members just waiting to drain every dime from the athlete's (admittedly sizeable) pockets.
Not exactly a system which guarantees success, is it?
Yesterday evening I was perusing a message-board discussion of Starbucks' recent plans to close hundreds of stores. Amidst the penetrating, insightful analysis I found this gem:
Starbucks has surpassed MCDs as the world's favorite public restroom. They should get subsidies from governments around the world for their efficient building and maintaining of these needed facilities. Emdeplam, message board poster
Yep. For whatever reason, that one earned an LOL from me.
Odd to think, ain't it, that $6 cups of coffee might not generate Glorious Unending Growth in a world doing its best to digest $4 gallons of gas. Go figure.
No, I don't mean "How long does it take for you to fill your car's tank?"
I mean, "How many hours do you have to work to fill your car's tank?"
There's a calculator at CNN/Money that's supposed to answer this question. But it seems a bit too optimistic — it doesn't appear to factor for taxes, for one thing. Or any other paycheck deductions. Those are pretty serious items to leave out, methinks.
(Heck, it told me I only had to work 1.3 hours to fill up our Accord's tank. No way can that be correct.)
So I built my own Excel spreadsheet to (hopefully) answer the question more realistically:
There. I'm much more confident of that figure. In our case, at least 2.69 hours of work would be required to top off the Accord. And with my Nissan truck, which has a slightly smaller capacity, it'd take a bit over 2.3 hours of work.
Pricing by "Hours Worked"
Figuring out any item's price in terms of "hours worked to purchase it" is a pretty good metric. (Joe Dominguez' tremendous book Your Money or Your Life (review) was the first to introduce me to this idea.) In the case of fuel prices, it's a good "hardship metric." Gas priced at $4 per gallon would generally be much more of a hardship for someone earning $10 per hour than it would for someone whose time is valued at $25 per hour. Of course, if that $10/hour person is debt-free, but the $25/hour person is leveraged to the gills ... well, that can change things a wee bit, can't it?
And yes, take-home pay matters much more than does gross income, which is what the CNN/Money calculator appears to use. I don't know about you, but I talk to very few souls who get to use their gross income to pay at the pump.
This is a simple "public service linkage" post — as good as any for a Saturday, I suppose.
Allrecipes.com is a site from which my wife (an exceptional cook in her own right) seems to get great use. A few days ago she forwarded me a link to their "Cooking on a Budget" section, and it seemed appropriate to mention it here. Who among us isn't at least a little more budget-conscious when it comes to food these days?
Traders, talking over the Morgan meeting, failed to remember any previous occasion on which a stock market conference had been called while a trading session was still in progress. They did recall, however, that in 1907, with call money at 125%, Secretary of the Treasury Cortelyou conferred with J. P. Morgan, put $25,000,000 of Government funds into Manhattan banks, halted the Panic. They remembered too the Northern Pacific crash of 1901 when, after Northern Pacific stock had gone overnight from $150 to $1,000 a share, the House of Morgan, representing the late great James J. Hill and the House of Kuhn, Loeb, representing the late great Edward H. Harriman, compromised at $150 a share, saved from ruin many a short. Then there was the U. S.-England war scare of 1895 when, with money at 80%, J. P. Morgan offered money at 6%, averted a threatened crash. Thus bankers have for a long time recognized their responsibilities as panic-preventers, and when the glass house of speculation has cracked and splintered, it has most often been the strong House of Morgan that has assumed the responsibility of fame and brought order out of confusion.
Thinking back to the Bear Stearns debacle in March 2008: Once more we saw the Federal Reserve, when caught in a bind, turning to J.P. Morgan (Chase) for assistance.
Best of pals, those two.
So history doesn't always repeat. But it surely does rhyme.
Thanks to CR at Calculated Risk for finding this video. Which, it seems to me, displays Amerititlement (that's "American entitlement") at its finest:
It occurs to me that upon watching that guy (nice wristbands, by the way) trash what is now, for all intents and purposes, the bank's house ... well, it seems that some folks simply are not mature enough to be homeowners.
Let alone be three-home-owners.
My daughter's five years old, and she's thrown her share of "I want it!" tantrums. But they typically last five or ten minutes, tops. After that she comes to grips with reality and goes right back to Green Eggs and Ham or her "My Little Pony" ponies, or whatever. Pre-K life, admittedly, packs its own set of challenges.
As does homeownership. There are obstacles to be met, important decisions to be made, and head-slapping gaffes to be dealt with — hopefully in an adult manner. But not so with this gentleman.
No, the world owes him flip-tastic returns on his housing investments. But since he's now got no shot in hell at those great returns — since he has now, in fact, been severely owned by his naiveté and greed — he's gonna be a Big Man and take it out on on the house. And by extension, the bank. And by a likely extension of that extension, the U.S. taxpayer. (Oh, and his neighbors. Can't forget his neighbors.)
Yeah. He's gonna show them.
You know, it'd be just marvelous if this video could somehow follow Mr. HouseTrasher around for the rest of his life. As in, it ends up on his boss' monitor at work. In his girlfriend's email inbox. On his parents AOL homepage. And certainly embedded in every single credit app he ever fills out for the rest of his days. Sadly, that won't happen.
Some readers might say, "Well, you don't really know his situation, do you?" And they'd be right: I don't. But what I'm fairly certain of is that this guy's a tool. Life just kicked his ass, and he has no idea how to correctly respond. He's exhibiting all the maturity of a below-average toddler, and he's carrying it out via a tantrum of extraordinary degree.
Congratulations, Mr. HouseTrasher.
I'm sure your life will only get better from here.
You're at fault in a small fender-bender in your family's sedan. The damage to your car, though, is purely cosmetic. Say, a moderately mushed left front fender. Quality repairs will cost between $600 and $800.
Do you spend the money to fix your car? At what level of savings, if any, does full repair become a viable option?
Not too long ago I posted about gas price stress. Even if your TV viewing is as sporadic as mine, fuel prices are still a topic that no doubt grace your local evening news EVERY SINGLE STINKIN' NIGHT.
For my part, I touched on some of the expected home- and workplace effects of $3-per-gallon gas, and calculated that gas at around $3.50 per gallon might cost an average family about $125 more per month than would $2-per-gallon fuel.
Well, now that our national average cost-per-gallon of fuel has reached four bucks, I wanted to revisit the topic just a bit. And also point you kids toward this nifty CBS news snippet:
The clip's only a little over two minutes long; the fairly interesting part hits at about the 1:49 mark. It's there that the reporter graces us with this:
And if you think what you pay at the pump is pricey now, just wait: This gasoline [$4/gallon] comes from oil when it was ninety bucks a barrel. Now that oil is almost one hundred forty dollars a barrel, economists say you can expect to see gas top six dollars a gallon. And that's in the next few months.
Now, I will profess that I have no idea how much truth is in that little statement. Drawing a straight-line trip from $140 oil to $6 gas seems a bit tenuous to me, but I suppose it could happen.
In any case, it gives me a fantastic chance to update my Excel-powered "Gas Price Stress" scenario. Let's add the $5 and $6 price levels and see what happens to gas prices for my completely-fictional Average Working Family:
And my hopefully-reasonable assumptions:
That's an Ouchie
So if gas hits $5/gallon, our fictional family better be ready: Their fuel expenses will almost tag the $418/month mark. And at $6/gallon, they're spending $501 per month.
These numbers look pretty yucky, really, when you see that they were spending just $167 per month back when gas was two bucks per gallon. (Ah, sweet memories.)
The above numbers assume, of course, that our family's driving patterns and habits don't change as fuel prices rise. Something tells me that's not likely.
For me, the striking thing about all this is that I know too many households who won't be able to absorb, say, the $250/month expense increase which $5 gas would bestow. And that doesn't even factor for the price increases in food and other downstream inflations.
For a great many Americans, the picture being drawn here isn't terribly pleasant.
NOTE: You can download my spreadsheet here. Feel free to play with it to your heart's content.
A friend emailed me a link this evening. This happens to me all the time, of course, as I'm sure it does to you. We know people, you and I. And those people send us links.
But do they send links which ask us to read brand spankin' new speeches by Federal Reserve officials?
Typically, no.
So this link seemed different. Yes. Right off the bat.
Recently a new reader emailed me, asking for an Excel (or OpenOffice) spreadsheet that could tell him what payment would be required in order to retire a loan within a certain time period. I figure I can help him out and present a very basic Excel tutorial, all in one shot. So here goes!
Calculating a Payment in Excel
Excel just so happens to have a function to calculate the payment of any loan that has (1) a constant payment, and (2) a constant interest rate. This blessed function is called PMT.
In Excel, function PMT returns a loan's payment (principal and interest) and looks like so:
=PMT(Rate,Nper,Pv,Fv,Type)
Rate: The interest rate of the loan;
Nper: The number of periods (or payments) of the loan;
Pv: The present value (or principal, or current balance) of the loan;
Fv: The future value, or balance you'll have when the last payment is made;
Type: Designated by either 1 or 0 (zero). Tells Excel whether payments are made at the beginning (1) or end (0 or blank) of the period.
Actually, in our example, function PMT requires only three of these inputs. You can leave "Fv" and "Type" blank; Excel will assume both to be zero.
So let's say we've been good patriotic customers of GWB National Bank (a purely fictional entity, of course). We have a loan with them which shows a current balance of $5,800. That's our loan's "present value," which means it's the "Pv" in the PMT function. GWB Nat'l Bank charges us an annual interest rate 16.99 percent; this (with a tweak) becomes the "Rate" in the PMT function. But we're on a debt-paydown kick, and now we'd sure like to have this loan paid off in 14 months (the "Nper"). Exactly what payment would be required to get this done?
Here's how I set things up in Excel:
Cells B1, B2, and B3 contain our data above — the Pv, the Rate, and the Nper, respectively.
Cell B5 is where the PMT function resides. Remember that the function is:
=PMT(Rate,Nper,Pv,Fv,Type)
... so in our spreadsheet, the function should be:
=PMT(B2/12,B3,-B1,0)
Watch Rate and Nper!
Astute readers will note that the PMT function doesn't simply refer to our "Rate" of 16.99% (Cell B2). Rather, to get "Rate," we must divide Cell B2 by 12. Why's this? Well, since we're interested in a loan term that denoted in months, and since our loan uses monthly payments, we have to convert the APR (that's Annual Percentage Rate) in Cell B2 to an equivalent monthly periodic rate. So we divide Cell B2 by 12. That gives us the monthly periodic rate. Now the relevant variables — Rate and Nper — are on a "monthly" basis, and Excel's PMT function can do its thing correctly.
All Worked Out
As we can see in Cell B5, a payment of $459.62 would be required to retire our loan in fourteen months. Just for kicks 'n' giggles, we can also have Excel show us how much we'll pay (in total) during those fourteen months. That's what you see in Cell B6, where the formula simply multiplies our monthly payment (B5) by the loan term (B3).
From there, it's a snap to see how much interest we'll pay during the term. In Cell B7, I simply take the total amount paid (B6) and from it subtract the starting balance (B1). The difference between those two figures is all interest, baby.
Get the Spreadsheet
You can get the spreadsheet shown above by downloading it here.
I know, I know. You guys are out there thinking, How can Michael let that story of the foreclosed Congresswoman go by without comment? Surely he's got something to say about this?
Yeah, I do. And that something is:
Friends, our taxpayer dollars are in serious, serious trouble.
For the uninformed out there, here's the latest newslink I can find:
Just between you and I, you know, being a Repo Man is not something I'd want to do. Whilst there'd definitely be something soul-satisfying about repossessing a yacht named "Bally Hoo," the threat of violence and/or gunfire from Downtrodden Dave and Misunderstood Mary as I absconded with their stuff — the bank's collateral — well, it just doesn't suit my personality.
The guys who do this gig — and I've run into a few of 'em over the years — are a different breed. They tend to be burly, determined, and gruff. And they wear ill-fitting Grateful Dead t-shirts.
Here's a clip from the article. Truly, I dig this. We hear about this uber-consumer, a guy by the name of Robert Dahmen, whose silly spending contributed mightily to the Bush Economy. "He is one of the millions of reasons the consumer-powered American economy did so well for most of this decade," we're told, "and one of the reasons its prospects look so bleak now."
And this, which boxes it all up so nicely:
The merriment came at a price, though. Toy Box [Mr. Dahmen's boat] cost $175,000. With the trade-in and a down payment, Mr. Dahmen ended up with a $125,000 loan. “You pay the interest up front,” he observed, “and the principal never goes down.” After seven years he still owed $111,000, about twice what the boat is worth. Meanwhile, he lost his condominium when his mortgage readjusted and those payments went up. His 401(k) is down to $9,000.
“I oversaturated myself with long-term debt,” he said. “It was a risk, a calculated risk. I obviously lost.” He is declaring bankruptcy.
Yeah. Yeah.
Anyone wanna bet that Dahmen's boat salesman called that boat "investment" no less than five times during the sales deal?
I find it mostly insane that in order for my wife and I to have qualified for assistance via this bill, we'd have had to have bought (by my nebulous calculations) a home somewhere in the $400k range. Which, by extension, would mean that we'd be carrying a payment of at least $2,400 per month (principal & interest only).
Would such a payment cause us "financial hardship?"
Uh ... yeah.
From the bill:
CURRENT BORROWER DEBT-TO-INCOME RATIO — As of March 1, 2008, the mortgagor shall have had a ratio of mortgage debt to income, taking into consideration all existing mortgages at such time, greater than 35 percent.
A wee bit vague there (sounds like the "35 percent" means "payment as including principal and interest" to me, though I could be wrong) but still a face-slap. As a means of comparison, given that (1) Oklahoma never contracted Property Fever, and (2) my wife and I have basic budgeting and math skills, our current house payment is a nudge under $700.
That is principal, interest, taxes, and insurance.
On a 15-year fixed-rate note.
Please don't tell me all about how "It's different in [Cali / Ariz / Fla / Nev]" or any of that. I'm totally not interested in the (admittedly vast) differences between a $400k house in Oklahoma City and a $400k house in San Diego.
If yuo cannot afford $400k in Oklahoma, then yuo cannot afford $400k in Cali. 'Tis not my fault you couldn't do math. Or read the fine print. Or question the motivations of your mortgage broker and/or relitter (that's "realtor" for the non-Calculated Risk readers out there).
Or move.
Once more, color me against any and all taxpayer-backed, bubble-inspired mortgage assistance.
To all the proud guys who read this blog: You only thought you had accomplished something in life. Well, it now appears that you and I have been one-upped.
By a 13-year-old kid.
Ralph Hardy, a 13 year old from Newark, Texas confessed to ordering an extra credit card from his father's existing credit card company, and took his friends on a $30,000 spending spree, culminating in playing "Halo" on an Xbox with a couple of hookers in a Texas motel.
Yeah, that's right. Wipe the coffee off your computer screen and keep reading. I couldn't make this stuff up.
Asked why he ordered two escorts, Ralph said he thought it was the thing to do when you win a "World of Warcraft" tournament. They told the suspicious working girls they were people of restricted growth working with a traveling circus, and as State law does not allow those with disabilities to be discriminated against they had no right to refuse them.
Kid was playing Halo in a hotel room with a couple of $1k/night ladies.
It occurs to me that maybe — just maybe — one of the sorrier points of getting old is that you lose your imagination.
The $1,000 a night girls, sensing something up, played "Halo" on the Xbox with the kids, instead of selling their sexual services.
Ralph's ambition is to one day become a politician.
On the other hand, one of the finer points of getting old is that you understand when there are chunks of your imagination which are best recounted only on a future episode of Dr. Phil.
Actually, if he sheds the home his family's living in, then by my math it's ten homes. But these days, who's counting?
A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.
Lemme guess: At least several of these homes were signed for as "owner-occupied," too, right?
[Investor Shawn] Forgaard bought a house in Santa Cruz, about 60 miles (100 km) south of San Francisco, in 2000. Four years later, using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative-amortization loans — in which payments do not cover the interest so that a borrower's balance grows over time.
Actually putting money down? How archaic is that?
Ah well. What the stock market giveth, the real-estate market lately taketh away. Sure sounds like someone's in need of a bailout. Congress-folks in the audience, can we get right on this, please? I sure would hate to see Mr. Forgaard get left out of the benefits of any current pending legislation.
After all, we need rising house values, and this guy was front and center in the glorious runup. No way should financial dumbassery of this magnitude go unrewarded.
I haven't spent much time talking about gas prices on this blog, mostly because I'm fairly tired of hearing about them 24/7. But Tuesday I came across an article on which I'd like to comment:
Wayne Hochwarter of the Florida State University's College of Business surveyed more than 800 full-time employees this spring when gas prices hovered at about $3.50 per gallon and found employees are simply unable to detach themselves from the stress caused by escalating gas prices.
The people surveyed work in a wide range of occupations, primarily in the southeastern United States, and drive personal vehicles to work with an average commute of 15 miles each way.
"People concerned with the effects of gas prices were significantly less attentive on the job, less excited about going to work, less passionate and conscientious and more tense," Hochwarter says in a statement. "These people also reported more 'blues' on the job."
A few more stats from the article:
[Due to rising fuel costs] 52 percent [of respondents] have reconsidered taking vacations.
— 45 percent have had to cut back on debt-reduction payments, such as credit card payments.
— Nearly 30 percent considered the consequences of going without basics, including food, clothing and medicine.
— 45 percent report the escalating gas prices have "caused them to fall behind financially."
What this article seems to tell us — aside from the fact that this country has too many researchers — is that lots of households apparently have a tough time coping when any one expense increases $125 per month. Not a surprise, of course, but a telling point nonetheless. The paycheck-to-paycheck crowd is alive and well. Or alive and suffering, as the case may be.
Where'd I get that $125 number?
Easy. I was just playin' with Excel:
Using the survey's 30-mile-per-commute-per-day average, and factoring for some other assumptions (2 drivers per household; 17mpg average from vehicles; and so on) I estimated that having gas prices at $3.50 per gallon (where they are in my town) costs our Average Survey Family roughly $125 per month more than does $2 per gallon gas.
If you'd like to see the (very basic) spreadsheet I used, and perhaps play with the numbers a bit, you can get it here:
I enjoyed changing the variables (like commute distance and mpg) and watching the effect these changes had on monthly fuel costs. Makes me glad my household owns two four-cylinder, decent-mileage vehicles (Nissan truck and Honda Accord). However, it also makes me wish I had my '95 Accord back. That little scooter had a five-speed standard transmission, and got FANTASTIC mileage (upper 20s to lower 30s mpg) all around.
Bothered By Higher Fuel Prices?
Am I bothered by higher fuel prices? At this point, not so much. Certainly it doesn't interfere with my workday — except for that part about having to listen to coworkers b*#&h and moan about $80/tank fill-ups.
Now, I don't like spending $40 or $45 to fill up our tanks, but the increased fuel cost hasn't destroyed my budget. In fact, at the end of the month, I don't notice it too much at all. My commute is less than 20 miles per day, and my wife's (stay-at-home mom) driving is largely "to-school-and-back" or "to-store-and-back." We're terribly lucky in this regard.
If you're a paycheck-to-paycheck family, however, whose monthly cash flow is already redlining, then current fuel prices could be a zinger. Throw higher food costs on top of that, and yes, you're talking significant stress.
As a general rule, only the very smartest people can make truly catastrophic mistakes.
— Charles R. Morris, The Trillion Dollar Meltdown
Well well well ... look at the fine mess we've created.
I picked up Charles R. Morris' 2008 book The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash a few weeks ago not because I think our entire financial system is on the brink of implosion (though I wouldn't automatically discount anything at this point). Rather, I simply wanted to learn more about our current economic situation.
Let's face it: As good a book as Naked Economics is, when circuses like Bear Stearns and You Walk Away splatter the headlines, well, standard macroeconomics can take a curious soul only so far.
How'd We Get Here?
Morris spends the first five chapters (106 pages or so) of Trillion Dollar Meltdown enlightening readers with a brief retelling of the last thirty-five years of American economics and finance. From Nixon to GWB, Morris revisits the missteps and miracles concocted by politicians, investment bankers, economists, and other zoo animals over the last generation or so.
Here's my attempt to sum it up in three words:
Credit. Quants. Deregulation.
Peering Over the Edge
It's in Chapter 4, "A Wall of Money," that things start getting good. Join me, won't you, for a quick jaunt through the three- and four-letter jungle of financial Scrabble:
The floodgates were opened. So long as you did the gritty, credit-by-credit documentation work with the rating agencies, you could securitize anything. Companies started selling asset-backed securities (ABS) to finance equipment, transportation fleets, or anything else investors could value. GE was an early and creative ABS issuer. Investment banks created collateralized bond obligations (CBOs), while commercial banks experimented with collateralized loan obligations (CLOs). (CDOs, or collateralized debt obligations, became the generic name for all types of securitized assets, including mortgages.) In almost all cases, a trust, or special-purpose entity (SPE), technically independent of the parent, would be created to purchase the assets. The purchase would be financed by selling securitized paper, usually with a tranched structure to broaden investor appeal. For banks, selling assets and liabilities off their balance sheets reduces strain on regulatory capital; for companies, it lowers apparent debt.
Then it got more complicated.
Of course it did! Can't have all those Harvard MBAs sitting around all day playing Yahtzee, can we?
About the same time as the securitized, or structured, finance industry was evolving at a breakneck pace, some brilliant financial engineers introduced new families of credit derivatives, the most important of which is the credit default swap.
Oh goodie. This new toy has the "D" word in it!
To take a simple case: Suppose US Bank decides it is underexposed to credits in southeast Asia. The old way to fix that was to buy some Asian bank branches or partner with a local bank. A credit default swap short-circuits the process. For a fee, US Bank will guarantee against any losses on a loan portfolio held by Asia Bank and will receive the interest and fees on those loans. Asia Bank will continue to service those loans, so its local customers will see no change, but Asia Bank, in Street jargon, will have purchased insurance for its risk portfolio, freeing up regulatory capital for business expansion. Credit default swaps became one of the fastest-growing new financial instruments ever. The notional value of credit default swaps — that is, the size of portfolios covered by credit default agreements — grew from $1 trillion in 2001 to $45 trillion by mid-2007.
So pretty soon everyone was credit-default-swapping with everyone else. You have parties, counter-parties, and counter-counter-parties. And no one involved, of course, thinks his firm will be The One Left Holding The Bag. You could always sell the shaky stuff to the next guy in line, right?
Aw, what the heck. It's not like there'll ever be any "shaky stuff" anyway.
In the boom years of 2005 and 2006, probably 80 percent of the securities in CDOs were mortgage-backeds, possibly 70 percent of those were below top-grade, and at least half were subprime or second-lien home equity lines — and these were the same years the industry was pumping out some of the most egregiously irresponsible loans in history. By assuming a permanent new era of very low defaults, it was possible to build families of bonds such that 80 percent of the issued bonds had triple-A and double-A ratings, even though 70 percent of the supporting assets were subprime.
Nope. No shakiness there.
To complicate matters, CDO managers often freely mix instrument types, so any bond might be backed by a grab bag of subordinated claims on a mélange of risky assets. Leverage is compounded further with "CDO2s," or CDOs of CDOs. You collect the risky tranches of a number of CDOs, which can sometimes be the hardest to place, and use them to support a new CDO, with a range of high-to-low risk-rated tranches. Highly rated bonds magically materialize out of a witches' soup of very smoky stuff. There is even a smattering of "CDO3s" out there, or CDOs built from the leftover tranches of CDO2s.
All of which Mr. Morris sums up succinctly:
Very big, very complex, very opaque structures built on extremely rickety foundations are a recipe for collapse.
And off to the races, we are.
Summary
I found The Trillion Dollar Meltdown to be a fun read — well, as "fun" as reading about your country's systemic financial collapse can be. I came to it, though, looking more for information — looking to pull together a better understanding of just where the weaknesses are in our credit- and debt-centric system.
The book's delivery is a bit jerky in places; its progression, just a tad disjointed. This suggests to me that TDM was rushed into publication. Given recent events, that wouldn't be a surprise, would it?
At 169 pages, the book is a fast read. But then we're back to that "rushed" thing again. Often I felt as if I were being pushed through it too quickly — as if there were more that Morris could divulge and clarify regarding certain topics, but which a fast-track-to-press caused to be omitted.
Too bad.
For what it's worth: I came in expecting a fair amount of fear-mongering from TDM. I suppose it's there to some degree. But folks who steadfastly believe that there's JUST NO WAY our financial system COULD EVER collapse, or that there's JUST NO WAY we could see another Great Depression (or a Greater Depression), will come to the book with that view locked-in. So every word of TDM will seem to them like fear-mongering dribble.
Just so you know, I'm not in that camp. While I appreciate all the safety valves in place with our system, I also totally respect the ability of greedy bankers, brokers, and politicians (and oh yeah — dumb-as-broken-rocks consumers) to really muck things up beyond all repair.
Who's to say what could happen? We Americans sure seem to let a lot of our "very smartest" run amuck in the financial sandbox...
A couple of years ago I first mentioned that my state of Oklahoma was considering implementing financial education into the public-school curriculum.
Last year, our governor signed into law the Passport to Financial Literacy Act (related PDF), which I'm quite happy to see. Topics to be covered include:
Understanding interest, credit card debt, and online commerce;
Rights and responsibilities of renting or buying a home;
Savings and investing;
Planning for retirement;
Bankruptcy;
Banking and financial services;
Balancing a checkbook;
Understanding loans and borrowing money, including predatory lending and payday loans;
Understanding insurance;
Identity fraud and theft;
Charitable giving;
Understanding the financial impact and consequences of gambling;
Earning an income;
Understanding state and federal taxes.
'Tis a nice start, in my opinion. Now we'll see how seriously the school systems take it. As the parent of a pre-K daughter in our public schools, I'm sure I'll get to find out ... in about eight years. (Per the Act, personal-finance curriculum begins in the 7th grade.)
Here's a question for the readers: 
