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    Shifei Chung
    Should a Financial Literacy Course be required in the...
    ELS session posted August 5, 2010 by Shifei Chung, last edited May 21, 2012 
    4992 Views, 42 Comments
    title:
    Should a Financial Literacy Course be required in the General Education Program for All College Students?
    names(s), affiliation(s):
    Shifei Chung (Rowan University) & Ramesh Narasimhan (Montclair State University)
    date:
    August 3, 2010 6:00pm - 7:30pm

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    • Ann Galligan Kelley

      My answer is "YES"!  I spend one full week each semester teaching financial literacy -- especially with intro students.  It is unbelievable that students can receive a college degree now and still not have basic financial literacy! 

    • Robert E Jensen

      "Making Computer Science a Requirement?" by Robert Talbert, Chronicle of Higher Education, April 4, 2012 ---
      http://chronicle.com/blognetwork/castingoutnines/2012/04/04/making-computer-science-a-requirement/?sid=wc&utm_source=wc&utm_medium=en

      Jensen Comment
      Making a new course requirement runs counter to the turf war compromises (e.g., at Harvard) of replacing required courses with required categories wherein students chose from a smorgasbord of alternative courses and even disciplines.

      I like to think more in terms of required general education topics. For example, I've been a long time advocate of requiring personal finance topics, including some tax education in so far as it affects personal finance. It depresses me greatly that so many graduates have no understanding of time value of money, inflation, tax exempt income, tax deductions and strategies, pensions, financial risk, and other essentials of financial literacy. In support of my advocacy is the research that concludes financial distress is a leading cause of divorce, especially distress arising from such rudimentary mistakes as piling up more credit card debt than can be afforded or buying new cars when gently used cars may be a better strategy.
      Bob Jensen's threads on requiring financial literacy (at least minimal) among all college graduates ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#FinancialLiteracy

      Back when Bill Paton was a towering force on campus at the University of Michigan it was reported to me (I never verified this) that Accounting 101 was a required course. I suspect that this would be rare today except for selected majors such as economics, health care administration, and business.

      What topics as opposed to courses should be required in gen ed?

       

    • Robert E Jensen

      "How Not to Require Computer Science for All Students," by Robert Talbert, Chronicle of Higher Education, April 6, 2012 ---
      http://chronicle.com/blognetwork/castingoutnines/2012/04/06/how-not-to-require-cs1-for-all-students/?sid=wc&utm_source=wc&utm_medium=en

      So let’s suppose we decide to require computer science for all students at our university. How are we going to implement that requirement? Here’s one approach that I believe could turn out to be the wrong way to do this: Set up a collection of courses, all of which count for the CS1 requirement, that are aligned to the students’ levels of technological proficiency. STEM students take a standard intro-to-programming course, liberal arts majors take a course that focuses more on office applications, and so on.

      But, wait a minute, didn’t I say last time that I liked Georgia Tech’s approach, where the single CS1 requirement was satisfied by a number of different courses that are aimed at different populations? Yes, I did. But favoring a collection courses with different populations is not the same as favoring a collection with different outcomes depending on how measure, or perceive, students’ technological skills when they matriculate. Targeting different populations is just smart curricular design; setting different learning outcomes for different students based on their incoming abilities is borderline anti-educational.

      We don’t do this in writing courses, for instance. Students certainly come into college with writing skills that are all over the map. Some students are barely literate while others are highly talented writers. But we don’t say that we only expect the former to be able to put together basic paragraphs whereas the latter are expected to write novels. If we are serious about education, we set and hold high expectations for writing skills for all students that ask students to really understand the concepts and processes of writing. We do not say to a student who comes in with low writing skills, “We’ll remediate you to a basic level but otherwise we don’t expect as much from you as we do others.

      We don’t do this in math, either, really. There are certainly different requirements for math courses at most universities; STEM people take calculus, business and social science people take statistics, and so on. But these differences are differences in content, not in expectations. A statistics course should be neither more nor less quantitatively rigorous than a calculus course; a liberal arts math course should be the same way. (I really mean that.) We don’t expect a lesser understanding of quantitative disciplines in this case; just a mastery of different aspects.

      The reason I bring this up is that I’m hearing some say, in response to the articles about the CS requirement, that we should require a course in office applications and basic digital literacy for those who come in with lesser technological skill, and that can be their CS course. I think that’s looking at the problem from the wrong end. It seems that we might want a global CS requirement because in this era, the quantity and quality of digital skills that we should expect from students has changed. Office suite proficiency is necessary but no longer sufficient: We want students to be able to program (where “programming” is broadly defined), to articulate how computers and the internet work, and so on. The question ought to be, where do we want students to end up with respect to CS, not where are they now. If we want all students to program — which I think is the true gist of the push to require CS — then let’s aim high, set the goal, and help students get there. (Which involves asking “where are they now”, I know.) But let’s not say that students with low tech proficiencies can’t get there or shouldn’t be expected to get there.

       

      Computer scientist Mark Lewis at Trinity University suggests that computer science courses can become more interdisciplinary by teaching coding and database skills in doing research on huge databases cutting across multiple disciplines on campus such as census databases. Do most college graduates now get diplomas without knowing how to code queries for databases?

       

      Compassless Colleges ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#Berkowitz 


      THE COLLEGE OF 2020: STUDENTS  ---
      https://www.chronicle-store.com/ProductDetails.aspx?ID=78956&WG=0
       

       

       

       

       

       

    • Robert E Jensen

      "What Does $1-Trillion in Student Debt Really Mean? Maybe Not That Much," by Beckie Supiano, Chronicle of Higher Education, May 16, 2012 ---
      http://chronicle.com/article/What-Does-1-Trillion-Mean-/131900/

      Student-loan debt is having a moment in the spotlight. An interest-rate hike planned for July 1 has become a hot political issue. New graduates, the majority carrying loans, are entering a still-weak job market. Through it all, nearly every public analysis on education debt now cites the same statistic: The total amount of outstanding student-loan debt is more than $1-trillion.

      That milestone made headlines in The Wall Street Journal, Forbes, tabloids, and blogs; it was on CBS and NPR. Pundits and interest groups have used the number to raise eyebrows about the high volume of education debt, sometimes suggesting a crisis.

      A trillion is a big, round number. It has some shock value. But what does crossing the $1-trillion mark really tell us?

      For one thing, that more people are going to college—and graduate school. The sum is an estimate of all outstanding education debt: private and federal student loans for undergraduates, parents, and graduate and professional-school students. And greater educational attainment is a goal the Obama administration and many nonprofit groups are pushing.

      At the same time, in the wake of severe state budget cuts, tuition is rising, and students and their families are footing a larger share of the bill. A greater percentage of bachelor's-degree recipients have borrowed, and the average amount of debt per borrower has also risen. About two-thirds of graduates of public and private nonprofit colleges have loans, with the borrowers' average debt about $25,000, according to the most recent analysis, of the Class of 2010, by the Project on Student Debt. (The average debt for the Class of 2004 was under $19,000, according to the federal government, which counts somewhat differently.)

      Total outstanding student-loan debt—even $1-trillion of it—may not have broad economic implications. It's still too small a sum to derail the economy, at least for now, says Mark Kantrowitz. He runs a well-known consumer Web site, FinAid, that displays a Student Loan Debt Clock, perpetually ticking up. But the clock is "intended for entertainment purposes only," the site says.

      The student-loan market can't be viewed like the housing market, says Mr. Kantrowitz. No one speculates on the value of an education, artificially inflating its price.

      Total annual student-loan payments, which come to $60- or $70-billion, now represent only about 0.4 percent of GDP, Mr. Kantrowitz says. And should a day come when the federal government—which makes most student loans—is too hard up to offer them, that will be the least of the nation's worries.

      Besides, education debt is "good debt," says Anthony P. Carnevale, director of Georgetown University's Center on Education and the Workforce. "This is exactly the kind of debt a society wants."

      A homeowner might find himself underwater on a mortgage, but an education doesn't lose value. And the government's new "gainful employment" rules, which attempt to prevent borrowers from ending up with worthless degrees, should make student debt an even better bet, Mr. Carnevale says.

      Still, student loans have been called the next bubble. That doesn't faze Judith Scott-Clayton, an assistant professor of economics and education at Columbia University's Teachers College. It is "not something that keeps me up at night," she says.

      Parallels with the housing market, she says, are unconvincing. But rising debt levels could affect graduates' pursuits, potentially deterring them from careers in public service. The government does offer income-based repayment programs, but few borrowers take advantage of them, she says, a fact that puzzles economists.

      Individual Impact

      The $1-trillion total, which varies depending on where data come from and how interest is counted, didn't hit 13 digits suddenly. It has been climbing for years, and there's little reason to think it will stop now.

      So today's tally doesn't necessarily matter, says Robert A. Sevier, senior vice president for strategy at the higher-education marketing company Stamats. "It's the trend line that's terrifying."

      But pointing to an impressive number can be helpful to groups that want to raise awareness about student debt and what they see as its repercussions. "It represents the impact to the economy as a whole, not just to individuals," says Jen Mishory, deputy director of Young Invincibles, an advocacy group that has called itself the AARP for young people. Debt delays some recent graduates from buying homes or starting a family, she says, decisions that affect the economy. (The group conducted a poll last fall of about 900 people ages 18 to 34, finding that almost half had delayed purchasing a home, but because of the "current economy" in general, not student loans specifically.)

      Meanwhile, the total student-loan debt now has enough zeros to get the attention of policy makers, who are used to thinking in trillions, says Andy MacCracken, associate director of the National Campus Leadership Council, a new student advocacy group. But students themselves are more concerned with the numbers that bear on them directly: how much they have borrowed, what their monthly payments are, and whether they can afford to make them.

      Individual calculations, of course, have more impact on students and colleges. And the total amount of debt isn't inherently bad. "If it can be paid off the way it's supposed to be, it's not a problem," says Kathy Dawley, president of Maguire Associates, a higher-education consulting firm. What matters is who has borrowed, and if they can pay it back.

      Someone who borrows a reasonable amount to help finance a good education, finds a well-paying job, and repays loans comfortably is evidence of the system's working. But if a borrower has either taken on too much debt, attended a subpar college, or failed to graduate or find work, that's a different story. Last week The New York Times posited that student loans are "weighing down a generation with heavy debt." Unemployment for recent college graduates stood at 8.9 percent at the end of 2011.

      When the Institute for College Access & Success, an independent nonprofit, started the Project on Student Debt in 2005, its goal was to bring attention to an overlooked issue, says Lauren J. Asher, the group's president. Now, she says, it is no longer on the sidelines: "Student debt has touched more and more people's lives."

      Continued in article

      Jensen Comment
      I'm a long-time advocate of having financial literacy somewhere in the general education core curriculum ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#FinancialLiteracy

      What I found more interesting than Supiano's article (that I thought was naive) were some of the comments following her article. One in particular is quoted below:

      Comment by thececinc
      Thanks for the courage to critique without identifying yourself "11336405". That's very professional of you. With that approach I am certain you are held in the highest esteem by your colleagues. Good for you. 

      For your reference the fee is $3,500, not $750 and it's not for a seminar, it's for a complete and comprehensive Financial Education program for a campus to implement. The program has the ability to scale to 500 students per semester. Now let's compare that price to the average amount of student loan debt today's college graduate has: $25,000. The program is priced in a fair & equitable range. (Also for your reference The Rich Grad Project is developed by Collegiate EmPowerment a 501c3 non profit educational organization)

      So Dr. 11336405, let's get to the real heart of the matter. Currently there are over 4,813 degree granting colleges & universities in the US, enrolling approximately 18.3 million students. Based on the most current data from the CIRP Study from UCLA's Higher Education Research Institute The American Freshman, the #1 Lifetime Objective of today's college student is: To Be Very Well Off Financially (79.6%). 

      Now here is the current economic reality of the Student Loan Crisis: 
      1. We have a student loan debt amount exceeding $1 Trillion Dollars
      2. The average student will graduate with over $25,000 in student loan debt
      3. We have $67 Billion Dollars of student loan debt in DEFAULT 
      4. In July of 2012, the interest rate on federal student loans will jump from 3.4% to 6.8%

      Now put this in context with these two additional facts
      5. The #1 lifetime objective of today's student is: To Be Very Well Off Financially (wether you agree with it our not)
      6. Yet of the 4,813 degree granting institutions in the US, how many of them have Financial Education in the core curriculum? Take a guess....

      ONLY 1 (Champlain College, Burlington, VT)

      So let's forget that facts & economic indicators that show THE SKY IS FALLING when it comes to the student loan crisis. There is a much, much deeper problem here. It's the fact that we are graduating an entire generation of financial illiterates and then sticking them with a non-dischargable debt the size of mortgage. Not only does this hurt our students, not only does this hurt our industry of Higher Education bottom-line it hurts the future of our country. 

      So keep the critiques rolling in Dr. 11336405 and maybe you can learn a thing or two. Then again you probably bought your condo at the height of the Real Estate bubble too. How's that working for you? 

      Additional Jensen Comment
      Among the comments

      Ms. Sapaiano stated: "A homeowner might find himself underwater on a mortgage, but an education doesn't lose value. And the government's new "gainful employment" rules, which attempt to prevent borrowers from ending up with worthless degrees, should make student debt an even better bet, Mr. Carnevale says."

      I find the real estate mortgage versus student loan debt comparison to be misleading. Firstly, the value of an education is only a heart beat away from having no future value. An insured house has future value that is far less risky since home ownership is easily transferred in full.

      Secondly, the amount of mortgage is highly correlated with quality where usually a high quality house qualifies for a much larger mortgage than a low quality house. In the education market, the highest student loans are often going to the lowest quality education, especially some of those for-profit university scams. This begs the question of why students will opt to borrow more for a low quality education given the choice of higher quality education, including distance education degrees, from state universities?

      The answer is that students are borrowing for grades rather than education. They are gaming the system for grades and are willing to borrow more for a low quality education as long as they can game for an A grade average ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#GamingForGrades

       

    • Robert E Jensen

      "Do Gold ETFs Really Move on Inflation Expectations?" by John Spence, ETF Trends, Junw 15, 2012 ---
      http://www.etftrends.com/2012/06/do-gold-etfs-really-move-on-inflation-expectations/
      Thank you Jim Mahar for the heads up.

      Gold ETFs are often described as an inflation hedge but recent academic research suggests the precious metal is more dependent on emerging market demand, particularly from central banks that hold less gold than their counterparts in developed countries.

      “Assuming that gold moved in lockstep with the CPI, the implied price would be about $780 an ounce, according to Duke University Professor Campbell R. Harvey and his collaborator, Claude B. Erb,” Bloomberg News reports.

      Gold is trading back above $1,600 an ounce as traders speculate on the odds of further monetary easing before next week’s Federal Reserve meeting. [Gold ETFs Eye Fed, Europe]

      Since the gold bull market started in about 2001, prices have risen more than sevenfold.

      “If gold is an inflation hedge, then on average its real return should be zero,” Erb and Harvey wrote, according to the Bloomberg report. Instead, returns from 2000 through March of this year averaged 13% a year on an inflation-adjusted basis.

      Gold ETFs such as SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) have likely fueled the metal’s rise since they have made it easier for more investors to buy gold.

      “Global ETF investor positions have continued to trend up in both gold and silver, reflecting the fact that long term price supports such as negative real interest rates, currency debasement and sovereign/financial sector default risk, and rising emerging market/central bank demand remain embedded in the 2012 outlook,” ETF Securities said in a report earlier this year. [Measuring the Impact of Gold ETFs]

      Harvey and Erb wrote that emerging markets can support gold because the precious metal represents a smaller part of central bank reserves than developed nations.

      Foreign central banks are “one of the more intriguing sources of incremental demand for gold,” says ConvergEx Group strategist Nicholas Colas. [Strategist: Why Gold ETFs Still Make Sense]

      “Among emerging economies, for example, central banks are actively buying gold to add to their reserves. The trend is most noticeable in Russia and India, but increasingly in China as well. Press accounts placed China’s net gold purchases in 2011 at over 200 tons, doubling its position in one year,” he said in a recent report.

      “And gold is clearly playing a role at the central bank level in these countries’ efforts to hedge such price increases,” Colas noted. “There is a popular saying on Wall Street – ‘Don’t fight the Fed.’ Why fight the Chinese, Russian and Indian central banks on gold? Like the Fed, they have much deeper pockets than you.”

      See Chart

      Continued in article

      Bob Jensen's investment helpers ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

       

    • Robert E Jensen

      Wharton Professor Olivia Mitchell on Worldwide Financial Literacy
      http://www.ssga.com/definedcontribution/docs/Olivia_Mitchell_GlobalFinancialLiteracy_SSgADC_The Participant02.pdf
      Thank you Jim Mahar for the heads up.

      Bob Jensen's threads on financial literacy are at
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

    • Robert E Jensen
    • Robert E Jensen

      Yet another example of a professional athlete who cannot handle money.
      Would it have helped to have take a required financial literacy course in college?
      "Bills QB Young owes loan company $1.7 million," by John Wawrow, Yahoo News, August 16, 2012 ---
      http://sports.yahoo.com/news/bills-qb-young-owes-loan-201322354--nfl.html

      Quarterback Vince Young has been ordered to pay a loan company nearly $1.7 million after missing a payment in late May, shortly after signing with the Buffalo Bills.

      The ruling against Young was made in New York State Supreme Court in Manhattan on July 2, according to court documents.

      Young took out a high-risk loan from Pro Player Funding for $1.877 million during the NFL lockout in May 2011, while he was still under contract with the Tennessee Titans. The loan - plus $619,000 in interest - was due to be paid back in January 2013 at an annual interest rate of 20 percent. That rate jumped another 10 percent if Young missed a payment.

      A ruling in the lending company's favor was made because Young agreed he understood the terms by signing what's called an affidavit of confession of judgment upon taking out the loan. The affidavit is regarded as proof and could be used at any time by the lender in the event a client defaults on the loan.

      TMZ.com first reported the ruling against Young last week.

      Young was unavailable for comment Thursday because he was traveling with the Bills to Minnesota for their preseason game on Friday. Messages left seeking comment from both the player's agent and publicist were not returned.

      Continued in article

      Ray Williams --- http://en.wikipedia.org/wiki/Ray_Williams_(basketball)
      "Nobody wnats you when you're down and out" --- http://www.youtube.com/watch?v=MsrA2fMn0sk&feature=fvst

      A Sad, Sad Case That Might Be Used When Teaching Personal Finance:  Another Joe Lewis Example
      "Desperate times:  Ex-Celtic Williams, once a top scorer, is now looking for an assist," by Bob Hohler, Boston Globe, July 2, 2010 ---
      http://www.boston.com/sports/basketball/celtics/articles/2010/07/02/desperate_times/

      Every night at bedtime, former Celtic Ray Williams locks the doors of his home: a broken-down 1992 Buick, rusting on a back street where he ran out of everything.

      The 10-year NBA veteran formerly known as “Sugar Ray’’ leans back in the driver’s seat, drapes his legs over the center console, and rests his head on a pillow of tattered towels. He tunes his boom box to gospel music, closes his eyes, and wonders.

      Williams, a generation removed from staying in first-class hotels with Larry Bird and Co. in their drive to the 1985 NBA Finals, mostly wonders how much more he can bear. He is not new to poverty, illness, homelessness. Or quiet desperation.

      In recent weeks, he has lived on bread and water.

      “They say God won’t give you more than you can handle,’’ Williams said in his roadside sedan. “But this is wearing me out.’’

      A former top-10 NBA draft pick who once scored 52 points in a game, Williams is a face of big-time basketball’s underclass. As the NBA employs players whose average annual salaries top $5 million, Williams is among scores of retired players for whom the good life vanished not long after the final whistle.

      Dozens of NBA retirees, including Williams and his brother, Gus, a two-time All-Star, have sought bankruptcy protection.

      “Ray is like many players who invested so much of their lives in basketball,’’ said Mike Glenn, who played 10 years in the NBA, including three with Williams and the New York Knicks. “When the dividends stopped coming, the problems started escalating. It’s a cold reality.’’

      Williams, 55 and diabetic, wants the titans of today’s NBA to help take care of him and other retirees who have plenty of time to watch games but no televisions to do so. He needs food, shelter, cash for car repairs, and a job, and he believes the multibillion-dollar league and its players should treat him as if he were a teammate in distress.

      One thing Williams especially wants them to know: Unlike many troubled ex-players, he has never fallen prey to drugs, alcohol, or gambling.

      “When I played the game, they always talked about loyalty to the team,’’ Williams said. “Well, where’s the loyalty and compassion for ex-players who are hurting? We opened the door for these guys whose salaries are through the roof.’’

      Unfortunately for Williams, the NBA-related organizations best suited to help him have closed their checkbooks to him. The NBA Legends Foundation, which awarded him grants totaling more than $10,000 in 1996 and 2004, denied his recent request for help. So did the NBA Retired Players Association, which in the past year gave him two grants totaling $2,000.

      Continued in article

      Wharton Professor Olivia Mitchell on Worldwide Financial Literacy
      http://www.ssga.com/definedcontribution/docs/Olivia_Mitchell_GlobalFinancialLiteracy_SSgADC_The Participant02.pdf

      Bob Jensen's personal finance helpers ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

       

    • Robert E Jensen

      Another sports hero who does not understand personal finance.
      Rule Number 1 --- Don't mess with the IRS unless you're in hiding offshore.

      Will the IRS settle for $179,435.07?
      "IRS Stabs OJ Simpson in The Wallet: You Owe us!" by Jose Lambiet, Gossip Extra, August 24, 2012 ---
      http://gossipextra.com/2012/08/24/oj-simpson-irs-taxes-1759/

      Jensen Comment
      I'll just bet that the IRS will settle for $179,435.

      Wharton Professor Olivia Mitchell on Worldwide Financial Literacy
      http://www.ssga.com/definedcontribution/docs/Olivia_Mitchell_GlobalFinancialLiteracy_SSgADC_The Participant02.pdf

      Bob Jensen's personal finance helpers ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

    • Robert E Jensen

      Financial Literacy Tools 2013
      The AICPA's financial literacy campaign has reached many individuals in creative ways, writes Melora C. Heavey, senior manager of communications at AICPA. A community college teacher uses the interactive Me Save feature on the Feed the Pig website to help her students identify what type of spenders they are. A friend uses the 360 Retirement Planner to make sure he is on track with his savings. Other popular tools include the Weekly Savings Tip and Tweens Curriculum. AICPA Insights

      Spreading Financial Well Being ---
      http://blog.aicpa.org/2013/01/spreading-financial-well-being.html#sthash.cJDIaL8x.azMXjhsc.dpbs

      Bob Jensen's threads on financial literacy ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

    • Robert E Jensen

      "What’s Wrong with the Financial Services Industry?" by Barry Ritholtz, Ritholtz Blog, February 21, 2013 ---
      http://www.ritholtz.com/blog/2013/02/whats-wrong-with-the-financial-services-industry/

      If you hang around these parts for any length of time, you will occasionally run across a jeremiad of mine complaining about the Financial Services Industry.

      I’ve been thinking about this more than usual lately. This has led to some correspondence with Helaine Olen, whose book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry is next up in my queue. (Her appearance on the TDS yesterday is here). It is similar to the deep dive my colleague Josh Brown took in Backstage Wall Street.

      My criticism is somewhat different than Helaine’s (though I am sympatico with much of her view). I break down the problems as follows:

       

      Simplicity does not pay well: Investing should be relatively simple: Buy broad asset classes, hold them over long periods of time, rebalance periodically, get off the tracks when the locomotive is bearing down on you. The problem is its easier in theory than is reality to execute this.

      Confusion is not a bug, its a feature:   Thus, the massive choice, the nonstop noise the confusing claims, all work to make this much more complex than it needs to be.

      Too much money attracts the wrong kinds of people: Let’s face it, the volume of cash that passes through the Financial Services Industry is enormous. Few who enters finance does so for altruistic reasons.

      Incentives are misaligned: As I’ve written previously, too many people are unwilling to get rich slowly. Hence, some of the wrong people work in finance, and some of the right people exercise bad judgment.

      Too many people have a hand in your pocket:  The list of people nicking you as an investor is enormous. Insiders (CEO/CFO/Boards of Directors) transfer wealth from shareholders to themselves, with the blessing of corrupted Compensation Consultants. Active mutual funds charge way too much for sub par performance. 401(k)s are disastrous. NYSE and NASDAQ Exchanges have been paid to allow a HFT tax on every other investor. FASB and Accountants have doen an awful job, allowing corporations to mislead investors with junk balance statements. The Media’s job is to sell advertising, not provide you with intelligent advice. The Regulators have been captured.

      What’s the net impact of all this on your investments ?

      The Financialized US Economy: The above list reflects nearly half a century of the financialization of the broader US economy. Instead of serving industry, finance has trumped it. This led directly to the financial crisis and economic collapse of 2007-09.

      Human Nature: Then there is your own behavioral issues. On top of everything else, you are governed by a brain that simply wasn’t built for this.

      All of these add up to a system that is flawed, and often fails to do its job.

      Continued in article

      Large public accounting firms are probably not in favor of simplifying the tax code
      February 17, 2013 message from Richard Sansing

      This week's issue of The Economist has a special report on
      off-shore finance. This article discusses the role of large
      public accounting firms.


      http://www.economist.com/news/special-report/21571556-accounting-firms-will-do-nicely-under-any-set-rules-merry-enablers

      Jensen Content
      Note that "simplicity does not pay well" in consulting!
      I wonder to what extent large CPA firms want simplified accounting and auditing rules (to increase profits on audits) and highly complex regulations and financing alternatives (to increase profitability of consulting). Thus far in the 21st Century everything seems to becoming more complicated., which is probably why audits are not especially profitable relative to consulting.

      However, unless a new regulation is put in place to rotate audit firms, auditing contributes heavily to fixed costs annually due to the tendency of clients to stick with the same auditing firms year after year. Consulting engagements come and go making them not especially reliable for paying fixed costs but making them profitable on top of the fixed costs paid for by audit engagements. Thant's my $.02.

       

    • Robert E Jensen

      "To Foster Financial Literacy, Students Need More Than Information, Report Says," by Beckie Supiano, Chronicle of Higher Education, February 22, 2013 ---
      http://chronicle.com/article/To-Foster-Financial-Literacy/137581/

      Jensen Comment
      The article does not make enough of a distinction between what students should learn about their immediate financial needs (e.g., student loans) versus what they should know when emerging as graduates onto the mean streets of life. For example, to better prepare students for life after graduation they should now some of the rudiments of tax strategies, buy versus rent strategies (e.g., for cars and homes), and knowledge of how to avoid being taken in by fraudsters and high pressured sales people.

      For example, the experience of our part-time house cleaning lady could easily be the experience of a new college graduate. Our cleaning lady is a 67-year old widow who probably should be thinking about retirement. She has failing eyesight and this year broke an arm and then a leg in separate incidents in her home. Since becoming a widow she drove the same 2005 Toyota until a high pressured car salesman got her in his clutches. Her old car only had 53,000 miles with a life expectancy of perhaps 300,000 miles before major repairs would be needed. Instead he talked her into a 2012 lease on a new Toyota.

      Now she can less afford to retire because of the lease payments combined with her adult children always begging her for money. She should have kept her perfectly good 2005 Toyota and learn how to say no to the children who take advantage of her meager Social Security and house-cleaning income..

      Similarly, college graduates probably place too much priority on getting a new car relative to better things they can do with money after graduation.

      Bob Jensen's threads on student financial literacy ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#FinancialLiteracy

    • Robert E Jensen

      Education: Federal Reserve Bank of Kansas City ---  http://www.kansascityfed.org/education/
      Note the Financial Fables section --- http://www.kansascityfed.org/education/fables/index.cfm

      Bob Jensen's threads on financial literacy ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

    • Robert E Jensen

      "Lack of Financial Literacy Complicates Student-Aid Process, Report Says," by Allie Bidwell, Chronicle of Higher Education, May 13, 2013 ---
      http://chronicle.com/article/Lack-of-Financial-Literacy/139223/

      "Teach Financial Literacy," by Steven Bahls, Chronicle of Higher Education, June 13, 2011 ---
      http://www.insidehighered.com/views/2011/06/13/essay_on_responsibility_of_colleges_to_teach_financial_literacy

      Bob Jensen's advocacy of putting financial literacy in the common core ---
      http://www.trinity.edu/rjensen/HigherEdControversies.htm#FinancialLiteracy

      Bob Jensen's personal finance helpers ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers

    • Robert E Jensen

      "The Law About Debt Collections Harassment," by Laura Adams, Money Girl, May 21, 2013 ---
      http://moneygirl.quickanddirtytips.com/debt-collections-harassment.aspx

      Bob Jensen's helpers for personal finance ---
      http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers