At the recent economic crisis on a lack of financial / economic literacy among Americans?

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The cause of the subprime crisis is that people took loans who could not afford it. I guess some of these people thought that if they can afford the payments, they will sell right away and get a profit, because housing prices always. While the average U.S. adult to understand the economic forces that their profession? For example, I am currently an engineering student who intends to enter the oil and gas, I know that if gas prices fall, even though renewable energy has become popular, my Employment prospects are bleak. I also understand that the engineer in an oil company is less likely that his job sent overseas as a software engineer (just because it is not cheap, a new refinery built anywhere) is. My parents, on the other two are in the health sector. Their jobs are relatively stable, because most people will regardless of their financial condition in a hospital if they are really sick.

3 Comments
  1. Reply
    Dorothy
    May 3, 2011 at 12:59 am

    I think our economic crisis does stem from the lack of education that Americans have regarding finances and economics. Lots of people talk about being scammed into their mortgages but common sense prevails. You cannot pay for what you cannot afford. So many people want it all and they want someone else to pay for it.

  2. Reply
    chris n
    May 3, 2011 at 1:01 am

    I understand your point. But, the housing market is just not the greatest to get into, ever. I think it’s better to rent. Some may disagree, but, think about it. It takes most people 30 years to own their house. So, for those 30 years, you are constantly pay interest on what you owe, as well as paying the principal. And, in the end, what do you really own? If you go to sell the house later, you better hope an idiot is looking into buying it. House price are very elastic. And, it can take years to sell. Rent is probably the best way to go. Just as long as you abide by your contract. The contract to me is the only bad part. But, thinking about in contrast to buying a house, it’s not much difference. Pay a mortgage for 700 or pay rent for 400. I say do the later and invents the 300 in an index fund. Not a mutual fund. An index fund. You get about 10% back so, after 30 years…that extra 300 a month turns into about 120,000. That’s my look at it. Of course, you can’t sell your apartment. But, $ 120,000 is pretty nice. Compared to going into debt.. RENT RENT RENT….You don’t have to be a genius to figure it out.

  3. Reply
    arch0049
    May 3, 2011 at 1:06 am

    Chris, it sounds like 6 one way a half a dozen the other… you are in agreement.

    And, yes the asker of this question is absolutely right…. People in the USA have very little financial knowledge on average. In the past 30 years it has become stylish and vogue to be fiscally ignorant and live above your means…

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