Originally Posted by gunner My investment in property like many of my friends has absolutely nothing to do with "old age poverty". Its nice thinking i work hard for the future of my children, hopefully giving them a good start in life with some, financial inheritance.

I save- and pay into a pension for my old age. O and of course my pension from doing my bit in the Army

Originally Posted by Scucca You live in a country with appalling inequalities. Intergenerational social mobility is relatively limited. I can of course therefore appreciate how you want to protect your children from the realities of our class ridden country I agree our country has many inequalities, But you must understand we are not a "collective" we are all individuals. And as individuals we make a lot of our own choices in life, some good, some bad. You constantly lump the population together as an homogeneous blob in many of your arguments and this is fundamentally wrong. My research is neither empirical nor theoretical but proven by speaking to many of my friends on this issue. Its not a case of "protecting" my children from anything it will just enable them to perhaps improve there financial quality of life when the time comes. Folk know that they cannot necessarily rely on pensions. Even those that have saved sufficiently have been caught out (and needed government bail-outs).

Originally Posted by gunner But, the way i see it hopefully once i reach old age the main bulk of my debt will of been payed off so i will be able to live a comfortable existence.

Originally Posted by Scucca Would you consider equity withdrawal if needed? Owning one's house does offer security (unless of course the government forces you to sell it in order to pay for nursing home costs)

Originally Posted by gunner If by that you mean remortgage yes, as long as the amount i borrowed could be payed back prior to my retirement age [whatever that will be]

While such a course might have some utility if it teaches students how to track and understand their finances, seek credible information, etc., I'm not sure that it would make a difference in preventing the development of asset bubbles or materially reducing the risk of one's making bad investment decisions.

In asset bubbles, initial large rises in asset prices seem to confirm higher returns can easily be achieved. Market behavior increasingly distances itself from fundamentals as prices continue to rise. People see a "new era" so to speak e.g., the Internet would enhance productivity so greatly that the "old" rules of thumb e.g., Price-earnings ratios become irrelevant. As prices continue to rise, people feel wealthier (the "wealth effect") and increase their consumption. In turn increased consumption leads to higher economic growth. People then see that higher economic growth as additional confirmation that, for example, profits will rise (and so will stocks) and the rush into stocks intensifies. The cycle feeds back on itself and prices soar well beyond valuations that could be supported by economic fundamentals. In short, the markets overshoot on the way up.

Then, when some "unexpected" development takes place i.e., interest rates rise, energy prices rise, a high-profile company has disappointing earnings, things turn in the opposite direction. Then, especially if the new development is greatly at odds with earlier expectations, a rush in the opposite direction can begin. Sometimes prices collapse beyond what is justified by fundamentals. Sometimes there is a prolonged retreat and then long period of relative stagnation.

Unfortunately, such a process appears to be an aspect of human nature. Hence, no course is likely to substantially alter human behavior. Such courses might be useful in helping dispel such myths as home prices almost never fall, homes offer a good hedge against inflation (empirical data shows otherwise), stocks always go up in the long-term (there are long periods of time where after-inflation returns are negative), stocks are less risky than bonds (stocks offer residual claims on a firm's cash flow, debtors have priority), efficient markets provide an accurate glimpse into the medium-term future (prices reflect fundamentals and expectations and expectations can shift dramatically in response to economic shocks for which people's foresight has not proved clairvoyant), securitization reduces market risk (it makes markets for those securities more liquid, but risk is distributed more widely, potentially reducing individuals' risk exposure, but overall risk remains unchanged; widespread holdings of such securities can actually plant the seeds of contagion that makes a crisis more widespread than would otherwise have been the case), etc.

Instead, some prudent regulation--not a lot, but strategic intelligent regulation--could be helpful. As asset bubbles have in common credit booms that precede them, regulators could focus on reducing the prospect of credit booms. They could require downpayments of let's say 20%-25% on homes without exception and bar the use of loans to raise funds for downpayments (avoiding overleverage)/mortgage balances would be limited to a percentage of a household's free cashflow. Such an approach would probably provide a better mechanism for screening candidates for mortgages than the existing practice of credit scores, alone. It would also reduce home owners' risk exposure by reducing the risk of their becoming overleveraged.

Regulators could also limit home equity loans to the lesser of a modest fraction of an owner's equity in that home or percentage of the household's free cashflow. That way, a homeowner would not go "under water" if the value of his or her home fell during a period of time. At the same time, he or she would have sufficient cashflow to make payments on his or her home equity loan even if household income fell for a time.

Regulators could also increasingly require that mortgage-backed securities must be marked to market rather than model (when such valuations are lower than face value) and, in cases of uncertain valuations e.g., due to thin or illiquid markets, must be given highly conservative valuations. Practices of keeping riskier lending/investing practices off balance sheet could be reduced dramatically, even as this would represent a fundamental change in how accounting guidelines treat contingent liabilities, etc. Investors would then have a better understanding of the actual risk exposure of such companies.

In terms of Freddie Mac's and Fannie Mae's lending requirements, lending for jumbo mortgages should be avoided (again, reducing the risk of overleverage). Instead, the mortgage loan limits could be indexed for nominal economic growth. That way, the loan limits would rise to reflect overall economic fundamentals but would not rise to such an extent so as to fuel an unwarranted asset boom.

Originally Posted by Scucca Compared to the US, it is more effective at reducing poverty

Originally Posted by Scucca Take every Western country and compare their poverty rates and home ownership rates.

Originally Posted by Scucca Check for poverty definition differences (the standard threshold is 60% of median equivalised income, with the OECD providing the equivalence scale)! You really shouldn't be using the CIA for this stuff. The Luxembourg Income Study is more suited for poverty comparisons

Originally Posted by SFLRN Is what way is the UK has a higher portion of its citizens living under the poverty line? I need real evidence for that because the general data does not suggest that.

So which country(ies) compare(s) favorably to the U.S.?

Perhaps you should cite the information that indicates that 25% of Britain's population is in poverty.

Originally Posted by Scucca How would you dispute that poverty risk increases the demand for home ownership?