[backhoe]

One word she missed...

Taxes...

[JZoback]

Major bump

[proxy_user]

"The consequence is a wealth transfer of tens of billions of dollars every year from middle-class families to a handful of big banks."

The banks don't actually keep this money. They mostly sell off the revenue stream from credit cards to institutional investors, mostly large mutual funds.

But some gets paid out in dividends.

[Age of Reason]

Some older caller to a talk show yesterday remarked how his father put three kids through college on a bank teller's salary (and I'll bet he was a teller 'till he retired; no need for mid-life career retraining).

It is nowhere near as easy to make a decent living as it used to be.

[Libertarianize the GOP]

I wonder if she has ever heard of land use planning and how any time you limit the supply of housing you drive the price up.

[Tax-chick]

"Families are vulnerable because they've stretched the fixed costs they have to pay month in, month out, no matter what. If something goes wrong and you face a period of unemployment, there's no way to cut back on the mortgage."

Well, darn, I guess I'm sorry for them. Really (a little), because all of us are misled by marketing at some point in our lives.

How about they sell the house that's 3x what they need, take care of their own kids, get rid of one of the $60,000 SUV's ... no, too obvious, better get the government to take care of everything ...

I hate to be unsympathetic, but we have 6 chidren on one income, and survived over a year of unemployment without any major problems, because we planned ahead: "Will we be able to afford this house (car, activity) if something goes wrong with the job?" Yes, we did, and so could these people if they weren't in a fantasy world.

[GovernmentShrinker]

"Bankers who wear $3,000 suits and starched shirts are now charging interest rates that Jimmy the Leg-breaker didn't charge 25 years ago," Warren says. "Nobody sounds the alarm. The consequence is a wealth transfer of tens of billions of dollars every year from middle-class families to a handful of big banks."

Huh? Interest rates are at historic lows. The only people getting charged super-high rates are those who have already destroyed their credit, so high rates obviously have no part in the cause of their financial problems.

And this article provides numerous illustrations of the number one rule of financial stability: don't have children before you can afford them. What are people thinking of, having a baby while they've got $30,000 in credit card debt, or before they've paid off their own student loans? Get completely out of debt except for a reasonable mortgage, pay cash for a good used car, and THEN start bringing children into the world.

[kitkat]

***But Ms. Warren, a law professor at Harvard, rejects the conventional theory that overconsumption - squandering money on big-screen TVs, McMansions, restaurant meals, oversized cars, and luxury vacations - is to blame for insolvency and all those maxed-out credit cards. ***

SIMPLE RULE of economics: The more money people make, the more they spend.

[biblewonk]

This is starting out very interesting, considering it's from a Ms!

[PennsylvaniaMom]

Boy does this post hit close to home. I am currently taking classes, online--which I should be reviewing questions for instead of FReeping, but you know how that goes--to get my real estate license. PaDad and I have five kids--two now in college (so you know where our money goes). He works fulltime in engineering, I work parttime (eve. and weekends so that there is always one parent w/our three younger kids), and as I said retraining to be a realtor. As a second parttime job, I sometimes 'show' (babysit) open houses...mostly 'McMansions.' In depressed western Pennsylvania there is a building boom in 350,000 plus homes (and land is cheap here, low property taxes). There is, conversely, a glut of 350,000 plus homes being resold (finanaces gone bad). What amazes me, is going into a 300,000 homes, owned by a two income couple, usualy late 20s early 30s, that have basically no furniture (card tables and mattresses on the floor). Walk in pantries have neat top of the line appliances (wedding gifts?) but when you open the door to show the space it is usually devoid of food (always eating out?) It is like these people put every penny into their granite countered/marbled floor/cathedral ceilinged McMansion and live on nothing else...AND lendors are approving these loans--the debt/income ratios must be out the window for these folks to have gotten the credit needed to mortgage such an extravagent home.

[hopespringseternal]

The arrival of two children added more expenses. "Babies are money-eating machines," she says. "They need so much."

Kids are cheap, unless you hire someone else to raise them. They don't eat much, and their discretionary spending is entirely under your control. Diapers are moderately expensive, unless you go cloth.

College is expensive, but weighed against never being born getting loans or learning a trade isn't so bad. Who says life is worthless without a B.S. degree?

I suspect that two incomes usually ends up being more of peoples' problems than they realize.

[nutmeg]

read later bump