Another friend makes the headlines. . .

Fresh perspective on $700 billion bailout in US

-ST FORUM 7th October

DEVELOPMENTS in the United States financial world trouble me - due not so much to fears of a deep recession, but the persistent ignorance showcased by top leaders, Wall Street 'wizards' and consumers in general. Have these people gone blind to the various financial fallouts that have plagued them for decades?

It is argued that the $700 billion bailout is necessary. But is it? Mr Jim Rogers, a well-known billionaire who lives here, argued that such rescue plans may prove disastrous, leaving behind a cancer that should have been cleared by the body, as in the case of phantom companies that continue to survive in South Korea. Yes, they can flood the economy with money, boost depositors' confidence and increase lending activities. But that does not root out the perennial disease: financial ignorance.

Instead of rewarding the 'brilliant' financial gurus or consumers who borrowed beyond their means when they should have known better, I suggest the US government use the money to financially educate the people. They can even start with schoolchildren and train them over the long haul to be financially savvy so they can manage their risks better and be alert when faced with financial advisers who really have no business giving such advice. Contrary to popular belief, basic financial knowledge is not hard to comprehend. I have attended such courses and seen how cleaners fare as well as doctors.

With more financially literate people, there will be greater demand for serious advisers, snuffing out the incompetent ones. Financial companies, in turn, will issue better and more secure policies, knowing there are fewer 'lemons' or poor borrowers vying for them, thus overcoming the issue of adverse selection. Making things more secure, passes in basic financial courses offered by the government could be used as requirements for accepting prospective clients.
I concur that all this a bit too idealistic. But, it is certainly better than feeding blind wolves. The bailout has given them a new lease of life. I had hoped they would starve and wither away, but it looks like they will survive till the next full moon and create mayhem again.

-Muhammad Farhan Noor Mohd

Hahaha! You go boy! Some idea eh??? Farhan the brilliant joker. . . Catch up after our exams!