Monday, December 31, 2007

Mortgage meltdown same as losing cash?

Here's an interesting perspective for those of us watching a significant portion of their net worths evaporating into thin air ($720 billion in total, so far):
If you are a homeowner, how bad do you feel about this? You should feel pretty bad, but I’m guessing you would feel a lot worse in the following scenario: home prices did not fall at all last year, but one day you took $18,000 out of the bank to pay cash for a new car, and someone then stole your wallet with the $18,000 in it. At the end of the day, your wealth would be the same (down $18,000, either from depreciation of the value of your home or because the money was stolen), but one loss is psychologically far worse than the other.
This is so true.

Lost: Billion. If Found, Please Return to Owner, Preferably in Cash - Freakonomics - Opinion - New York Times Blog: