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Market contagion another symptom of financial illiteracy epidemic The bailout bloodhounds were still baying at the moon as of this writing. That rat they’d been smelling was sent scurrying down Wall Street last week along with the original US$700 billion government bailout proposal for U.S. financial institutions. But those same disturbing odours are not confined to the boardrooms of North American investment houses in this drama. There’s a sizable mouldering carcass down at street level. That would be the dead elephant being ignored in the living rooms of too many North America homes. Regardless of what final form it takes, the government’s Wall Street bailout will mark another taxpayer underwriting of monumental financial recklessness. And that dead elephant in the room? Financial illiteracy – a North American epidemic that invites subprime mortgage mania and all manner of marketplace chicanery.
So taxpayers are far from blameless here. The dead elephant needs removal. But who’s up to the task? Not the public school system. It long ago abdicated any responsibility in arming students with life skills like financial literacy, nutrition and human relationships. No, it will likely be up to people like Braun Mincher. The 35-year-old is that rarest of entrepreneurial bird: a self-made multimillionaire who dropped out of college at 18. He sold his telecom business five years ago, but not before learning about financial illiteracy the hard way. Like so many of his contemporaries, he left school knowing next to nothing about money – how to save it, how to invest it, how to spend it. Only hard work and an innate business sense helped him survive and prosper. The sale of Mincher’s business has freed him to pursue other passions, and fighting the American financial illiteracy pandemic is one of them, because Mincher knows that a financially literate citizenry is the bedrock of a sound economy. Without it, you get a country that’s somewhere in the neighbourhood of $37 trillion in debt and a willing patsy for all manner of marketplace misadventure. Of America’s latest investment embarrassment, Mincher points out that there’s plenty of blame to go round: “People got into houses that they never should have been able to because of lax lending standards, but also because they didn’t know what they were doing.” His self-published “Secrets of Money: A Guide for Everyone on Practical Financial Literacy” seeks to address that ignorance. This is not get-rich-quick fiction adorned with tanned gent on oversized yacht. Mincher’s message: “I don’t know any ways to get rich quick, but I know a lot of ways to get rich over a long period of time.” But that, I’m afraid, requires the kind of heavy lifting and adherence to fundamentals that are likely beyond a credit-addled citizenry. According to Mincher, those fundamentals are pretty straightforward. “You need to save more than anyone you know; avoid or pay off debt; you need to work more; you need to work harder; you need to take on a second job; watch your budget, track your expenses and live within your means.” Individuals, he says, must also take responsibility to become financially literate, and the school system has to make financial literacy a graduation requirement. Most people will appreciate the common sense of Mincher’s game plan. The uncomfortable question of the day, however, is do they have the discipline to execute it? In today’s North American society: not a chance. But when China calls in all that U.S. debt it has been accumulating while America plays and it works, we won’t have any choice. • Timothy Renshaw (
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) is the editor of Business in Vancouver. His column appears every two weeks. |
