James Surowiecki on Financial Illiteracy

Back when I had time to read The New Yorker, I was a big fan of James Surowiecki. I would always look for his column; if it was there, it was usually the first thing I would read. Unfortunately, he’s no fan of mine. Surowiecki makes three points about our recent long post on nationalization:

It makes intuitive sense that complicated mortgage products would pose the most danger the borrowers who were least able to understand them. But did that intuition bear out in the real world? Sadly, yes. According to a new paper by Kristopher Gerardi, Lorenz Goette and Stephan Meier, "foreclosure starts are approximately two-thirds lower in the group with the highest measured level of numerical ability compared with the group with the lowest measured level.

James Surowiecki of The New Yorker argues that criticism of the Fed's easy money policy with regard to its impact on interest-bearing assets is wrong, or at least misguided.

Ira Stoll submits: Two magazine pieces are newly out about QE2. In the New Yorker, James Surowiecki writes:Complete Story »

Failing to pay for the deferred costs of current expenditures gets all those practicing credit card budget thinking in trouble. That includes lots of individuals. But it also includes many governments. They pay huge rewards to special interests and act like they think the cost doesn’t exist. Only an extremely financially illiterate society could elect so many of these people.

President Barack Obama called for linking financial aid to college affordability when he addressed Congress last month, but even as costs keep rising, some experts say not to expect crucial changes this year.   Reforming how financial aid is distributed – with incentives to keep tuition down – probably won’t come until after Congress tackles equally thorny changes in primary and secondary school education, known as K-12 in the U.S.