Monday, July 6, 2009, AM | Leave Comment
I don’t know much about what Einstein did as far as his research and publishing papers. If he simplified the complexities of the universe in his papers, then it seems now that one side of his brain was dead. If he left the universe alone and let it be a complex universe that we don’t understand, then according to some research, he was a genius and his brain was supercharged.
The Adjustable Rate Mortgage (ARM) is no more. If I take it, there is something wrong with my brain. You see, my brain simplifies all the complexities in the world. ARM is one of those complexities that my brain makes it simple. It makes it simple even though my brain does not understand what in God’s name it’s getting into.
Now they tell me when I am doomed with no house, no car, no job, and no money either. Let me explain it in simple terms. But I warn you I don’t understand it. You don’t have to believe it. That’s another thing. We believe too much. We should “un-believe” our minds for our sake, and for the sake of our families.
Excerpts from the article in Newsweek
A region of the midbrain called the ventral striatum [Is there a doctor in the house to explain it in simpler terms?] may be partly to blame for the fact that millions of Americans fell prey to risky financial gambles, such as adjustable rate mortgages.
Since the early 1980’s, lenders have lured prospective borrowers with complicated loan agreements boasting low teaser interest rates, which, after staying fixed for a period of time, inflate dramatically, leaving some consumers struggling to come up with their monthly payments and resulting in skyrocketing national foreclosure rates.
Who are these less financially savvy decision-makers? According to Stanford’s Shiv, prior research shows that people with increased sensitivity in their ventral striatum are often extroverted. “They tend to be more impulsive,” he says. “They also tend to be more optimistic.”
So, when confronted with an adjustable rate mortgage, they simplify the situation and might play down the probability of misfortune in the long term, such as losing their job and not being able to make payments or a tanking housing market that would make it impossible to refinance.
Even with new consumer protections, financial products remain complex, so how do impulsive consumers protect themselves from falling for the tricks and traps in the lending game? Thaler suggests choosing a simple 30-year mortgage.
In a Nutshell
So what does consumers have to do to buy a house. Rome was not built in one day and neither was ARM. It was shoved down the throat of innocent and simple borrowers.
O! Ye researchers of the world! Spare us from this mambo jumbo. We never understood nothing before and we don’t understand nothing now neither – and they tell me don’t use double negatives, who cares.
Why must it always be the innocent and simple consumers under the financial knife. Leave us alone. We know already our brains are dead. Why else would we give money to the Madoffs, the Stanfords, the government and the big lending institutions?
Do research on the blood suckers, the schmucks of the world and see what you come up with. My friend from the 60s once said “You know! We are simple people. We don’t live by explanations. We live by promises followed by action. We live by faith and good deeds.” Tell that to the researchers.
What do you think?
Nothing. I live peacefully and at ease by thinking nothing.
Read the full article “The Impulsive Deciders”Facebook.com/doable.finance