The ones that are equivalent to public schools?

I don’t think there are too many actual families that fit this paradigm. If someone is using private school for 3 kids, it’s unlikely they’d conclude the public one is equally good. This also assumes property taxes are equal in both locations which is unlikely if the new school is sufficiently better than the old one to induce the change. And I don’t know how many private high schools charge just $5000 per pupil.

And they did publish 15 letters of my letters over quite a brief time (all of which are still valid today) so they must have felt I had something to say… why they then cut me off I do not know they said I wrote too much which seems silly for a newspaper.

That said I am approaching or I might have passed 1000 letters in my TeaWithFT blog and I hope that one day I can look back at these letters and make some sense or some less sense about these period of time when frankly the world has been behaving quite nutty… to use a British understatement.

“When in doubt”…. excuse me, the doubt is yours not mine.

The allure of big return with no perceived risk is key to understanding much of Wall Street’s behavior, which is not to say that behavior should be condoned or forgiven. Wiser heads should have known better.

First Principle: The function of government in a capitalist society is to guarantee the security of the capitalists. Therefore, you have to be a capitalist. That means you have to have capital, which you can 1)inherit 2)earn and save 3)borrow. If you didn’t inherit your capital, and you’re not patient and self-controlled enough to earn and save it, you are in the vast majority of Americans. I’m not, and never having any debt of any kind has meant it took me longer during boom times to accumulate, but I kept going upward during busts, unlike the borrowers. I guess I’m a freak.

That said, here’s All The Other Principles:

1) Never borrow for consumption – that’s for suckers and idiots. It’s like the lottery: a tax on stupidity.
2) When you borrow to invest, make sure there’s a government guarantee somewhere to bail you out in case your investment doesn’t work out. If you can get such a guarantee (e.g., SBA loan) then leverage to the max, and if you can’t don’t leverage at all.
3) Diversify. Don’t run with the herd after the latest hot investment, and don’t try to “beat the market” (or anyone else). Think for yourself, do your own research, or don’t invest.
4) Once you have a safe, diversity-based strategy, don’t suddenly get wild because you feel you’re “missing out” on some bubble or market cycles have reduced your real return (as long as it is overall positive). Kindleberger pointed out that people get a certain lifestyle goal into their head and then feel pressured to take unsafe risks when safe investments just won’t produce the return they feel they “must have” to meet their goal. The goal is accumulation over time, not instant wealth.
5) Clean out your brain from the fantasy of capital gains and invest in steady income producing assets. Dividends are not a steady form of income, and the stock market is somewhere between a casino and a racetrack. Re-invest all returns until you have hit “critical mass” and can live happily ever after on the income.
6) To get in on the theft racket, only invest in sectors and companies with a strong government connection (the most obvious include military, health care, finance, etc.)

When it came to actually buying a house, I found myself outbid on several houses with people following a specific plan. People whose kids were already in school would max out an interest-only or even negative amortization loan with the plan of selling as soon as the kids graduated. This pushed prices up at least $200k on houses zoned for the best high school. We toured several houses in the spring where we saw high school senior year paraphernalia. I also saw things that indicated the sellers’ occupation — many didn’t have professions that would typically allow one to actually afford the houses we were looking at. It didn’t take a PhD to notice people were increasing their leverage to secure better education for their kids.

Greenspan became concerned and started raising interest rates leading up to the bubble being burst.

Doesn’t matter who, or what cohort, of even why. Declining interest rates increase house prices.

Rising property prices also increase local government income, which results in too ambitious union contracts and other spending. California’s a good subprime example. Liar loan union contracts.

Of course increasing health insurance bills (mentioned in the post) and rising oil prices amounting to a $500 billion annual tax increase didn’t help either.

The only reason we are not now in another Depression is that there were massive amounts of stimulus pumped out, and there was a 70% decline in the price of oil.