Friday, October 22, 2010



While driving through downtown Naperville today, I heard a radio commercial for one of Chicago’s major banks. It’s one I (and doubtless you, if you listen to news or talk radio) have heard on many occasions in the past but to which I only carefully listened today. In this stylistically schlocky piece, a fortune teller advises a (presumably) fortune seeker that there is “much water” in his future, probably a flooded basement or the like. The helpful announcer then goes on to advise the listener to get a second mortgage (which we have euphemistically called “home equity” loans for at least the last fifteen years) in order to have cash available for such eventualities.


Here’s a novel, probably wacko, idea: How about actually saving some money in order to have cash on hand for such eventualities? How about actually building up an emergency fund for the things that inevitably go wrong in life rather than creating another liability, calling doing so building an emergency fund, and congratulating yourself on your financial acumen? Hey, it worked for your parents; would doing so yourself really be the sure sign of financial fatuousness such idiotic ads want you to think it would be?

Wait, I forgot. If by some miracle, people manage to delay the purchase of the latest bauble designed to fortify their fragile egos and save some money, some financial “professional” will advise them that putting that money aside in some sort of liquid investment, such as a savings account, is a chump’s game. Why, if they were financially savvy, they would put the money in the stock market, where an 11% return is guaranteed “for the long term” (See my by now long seminal 9/3/10 piece YOU PROBABLY DIDN’T HAVE TO BE TOLD THIS AFTER THE LAST FEW YEARS BUT…), take out a home equity loan for emergencies, and thereby set up an ingenious arbitrage. Oh, boy!

What’s my point, beyond assuming my usual position of personal financial scold? Don’t be so sure that our bad financial habits have been eliminated by the travails we have experienced. Taken as a whole, the American people are still financial nincompoops, and the people whose job it is to provide them financial guidance (with a few exceptions, several of whom, probably not coincidentally, read this regular morsel of wisdom) are financial nitwits.

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