We live in interesting times.
The Financial Crisis of 2008 and the ensuing Great Recession have upended the lives and once hopeful expectations of people living throughout the Western World.
In Europe and North America, a sense of fear, despair and helplessness pervades throughout the general populace: from the university student who eagerly anticipated a bright future with endless career possibilities, to the elderly retiree who looked forward to a comfortable and secure retirement; from the blue collar trades worker who thought that last decade’s construction boom would never end, to the white collar software engineer who believed that her education and work experience would protect her from any economic downturn.
Within each Western nation over the past two decades, dependence on and access to easy credit had allowed individuals, governments and corporations to conjunctively create a veneer of economic prosperity. Beneath this illusory veneer was a very rough economic reality – due to: (1) globalization (which moves jobs offshore); and (2) advances in technology (which renders jobs obsolete) – average income per household has declined over the past 30 years.
To make these two points more clear, consider the following examples:
- Globalization – According the the website Payscale.com, the average salary for a Senior Software Engineer working in the United States (as of November 2011) was $92,325 USD. The average salary for that same position in India was $10,925 USD. In other words, a worker in India will do the exact same job (and a highly technical one at that) as his American counterpart for one-tenth of the American’s salary. Is it any wonder why corporations are so eager to outsource such jobs to the developing world in order to fatten their profits?
- Technology – In the Fall of 2011, Amazon launched a new website, Createspace.com, which allows authors to self-publish their works. An article in the New York Times cited sources within the publishing industry stating that this development will have a huge impact on that industry, leading to potential job losses for literary agents and editors.
From Bad to Worse
Over the past thirty years, these two economic forces have altered the global landscape between the “haves” and the “have-nots”. Western nations are becoming relatively poorer and nations in Asia, South America and Africa are becoming relatively more affluent.
These two trends, and their consequences on economic prosperity within what were referred to as the Developed World (Western nations – overwhelmingly negative) and the Developing World (everywhere else – overwhelmingly positive) are likely to be irreversible.
For the West, this downward trend has accelerated due to the Financial Crisis. Things were already bad, but now things since October 2008 have become much, much worse.
The Financial Crisis of 2008 resulted from the bursting of the American housing bubble. At the root of this housing bubble were: (1) lax lending standards – and potential fraud – on the part of U.S. banks that allowed unqualified (meaning insufficient income and assets to service mortgage payments) individuals to purchase homes they couldn’t afford; and (2) financially illiterate home buyers who were oblivious to the financial commitments they were making when they signed their mortgage agreements.
As an individual, you may not be able to influence the behavior of the banks – that rests with the governments and regulators of the nations in which they’re situated.
However, what you can do to educate yourself about financial issues that will be relevant to you in your daily life. Knowledge is power, and if you take the initiative to become financially literate, you can empower yourself to take control of your destiny, rather than being a victim of economic forces you don’t understand.
Our mission is to advance your financial literacy.
We believe that financial crises – be they personal, national or global, are caused by ignorance and fear. In turn, ignorance and fear exist due to a lack of knowledge and education.
Therefore, our goal is to educate you about important financial concepts that will enable you to:
- make a financial plan and attain your life’s financial goals.
- avoid financial mistakes that can create hardship and keep you from reaching those goals
If every one of us can attain financial literacy, we can collectively end financial hardship. We can then focus on the really important things in life, such as friends, family, and self-development.
We hope you that take time to explore this site, and take the first steps towards freeing yourself from the bondage of financial illiteracy.
© Copyright Fong and Partners Inc., 2011.