Last week The Consumerist had a post telling readers to Go Ahead, Strategically Default On Your Underwater Mortgage. This was based, more or less, on a paper from a law professor at the University of Arizona which addressed the legitimate conundrum of why strategic defaults are not more common.
A strategic default on a mortgage is when a borrower can make the payments 
but chooses not to. In other words, the borrower hands the keys over to the lender and walks away. It is important to remember that, despite much play in the media and academia, this is still a rather exotic maneuver. In order for a borrower to even begin considering such a move two things need to be true.
First, obviously, the house has to be worth a lot less than the outstanding mortgage balance. Or, in current slang, it needs to be substantially underwater. Swapping ownership of the house for extinguishing the debt is, essentially, selling the house for what is owed, and if what is owed is not meaningfully higher than what the house is worth, this would be a bad deal.
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The other week WalletPop had a post Want happiness? Forget money – get therapy instead in which was explained that money can’t buy happiness, unless you spend it on psychotherapy.
This was based on a study (discussed a little more completely here but not, as far as I can tell, available on the web) done by two British professors. They found that £800 worth of therapy was the happiness equivalent of a pay rise of £25,000.
Alas, this was not experimental science. As much fun as it would have been, the researchers did not choose people at random and give them piles of cash or toss them onto the couch. All they did was find that people who themselves decided to get therapy experienced the same increase in self-reported happiness as those that got a big raise.
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There is a pretty obvious reason why buying lottery tickets is a bad idea. You will lose money. The odds are usually just awful. Casino gambling is, in comparison, a comparatively sound investment.
And, of course, casino gambling is not a wise thing to do with your savings. You would have to be off the deep end of "positive thinking" to believe anything other than it was, for some, an amusing way to waste money.
That objection to gambling, and lotteries, is today so pervasive that we have all but forgotten another traditional objection. A hundred years ago, at least as common as the argument that you would probably lose was the one that you might win. Back in the almost forgotten era when gambling of all kinds was illegal throughout the country, it was argued that gambling undermined the work ethic, allowing some to become rich without appropriate effort. And that was immoral.
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Last week Moolanomy ran a long post on Forex Trading Basics and How It Works. Although reasonably factual, the post qualifies as bad money advice 
for strongly implying that there is a possibility that investing in forex might be a good idea. It also ends with a paid link to a forex broker-dealer.
Forex, if you don’t know, is trading in currencies, also known as foreign exchange. And if you didn’t know that, I’m sorry I told you. You could have probably lived happily ever after without knowing that this particular intersection of investing and gambling existed. Oh well. Too late now.
Superficially, currency markets are simple. A person might buy some Japanese Yen, for example, in the hopes that it would go up in price relative to the dollar. If it does, it can be sold for a profit, if it goes down, for a loss.
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It seems to me I have already cleverly mocked the Wall Street Journal’s Wealth Report blog. I think I said something about how the author doesn’t actually talk to wealthy people so much as talk to people who talk to wealthy 
people, or at least talk to those who claim to talk to wealthy people. Then again, maybe that was the Times’ Wealth Matters blog. It’s all a blur to me now.
The latest installment of the Wealth Report doesn’t merely talk to people who claim to talk to rich people, it rehashes an article on Reuters whose author talked to people who claim to talk to rich people.
The post, a little confusingly entitled "Do Millionaire Investors Get Better Deals?", is about how financial firms are now more interested in the investment business of sub-millionaires. This is a change from a few years ago when, we are told, they concentrated their efforts on bigger game.
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but chooses not to. In other words, the borrower hands the keys over to the lender and walks away. It is important to remember that, despite much play in the media and academia, this is still a rather exotic maneuver. In order for a borrower to even begin considering such a move two things need to be true.
Housing, PF Blogs | Frank Curmudgeon | 
December 8, 2009 12:59 pm | 
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