Money, banking & insurance
Dad, can I borrow your salary?
According to a study by the University of Michigan (US), 34% of adults aged 18-34 are the recipients of money from their parents. Moreover, over 50% receive non-cash gifts in the form of time which adds up to 367 hours of unpaid work per year. This is not kids that live at home either. Cash payments are usually for housing, utility bills and expenses. So what's going on? The answer is that growing up has got more expensive.Until 10 or 20 years ago parents assumed that their financial obligation to their children (typically US$ 191,000 up to the age of 17) ended when they graduated high school. Now the financial support can easily go on for another 17 years and can cost an additional US$ 42,000. Part of the reason for this shift is what New York Times writer, Anna Bahney, has called 'the scenic route from adolescence to adulthood'. People are getting married and entering the workforce later than they used to. Other key reasons are that education costs more and takes longer than previously, and housing is more expensive. In other words it now costs more for people to enjoy their parents' middle-class standard of living thanks to the likes of globalisation and free markets.
Ref: New York Times (US) 20 April 2006, 'The Bank of Mom and Dad', A. Bahney, www.nytimes.com See also 'Generation Debt by Anya Kamenetz and Strapped: Why America's 20-and-30-somethings Can't Get Ahead' by Tamara Draut.
Search words: loans, money, debt, students, generation Y, education
Man versus machine
Who would you rather have land an aeroplane - a pilot or a computer? How about eye surgery - would you prefer an eye surgeon or a robot? And how about money - would you prefer a man or a machine to manage your investments? Chances are the decision has already been made for you. Machines are picking stocks, calculating the risk-reward characteristics of portfolios and buying and selling shares so that the portfolio meets your required specifications. Of course a fund manager oversees all this, but in many ways their role is similar to that of a pilot - they are there to make people feel that there is a human in control. So apart from cost and speed, what are the advantages of machines over men and women? Machines are dispassionate and aren't distracted. They also work 24/7 and aren't in the habit of falling in love with the things they buy. Downsides? They do exactly what they are told to do so if the instruction is wrong or badly thought out they'll do it anyway. So, for example, if there is a sell instruction or shares fall below a certain price they will sell regardless of any larger picture. Machines don't have a conscience either and cannot be called to account, so ethical dimensions don't figure very strongly either. Still, if the game is just about is making money, a machine is probably your man.
Ref: The Independent (UK), 13 May 2006, 'Why the machines are taking over', J. Davies. www.independent.co.uk
Search words: robots, robotics, money, trading, shares, automation
And finally ...
The makers of an online science fiction fantasy game called Entropia Universe are planning to issue 400,000 players with ATM cards. This will enable players to view their virtual cash generated by playing the game. Given that the virtual currency has a real-world exchange, rate players will also be able to withdraw real cash too. A Entopia Universe player from Miami recently spent US$ 100,000 buying a virtual space station while players of Everquest routinely spend real money buying better virtual equipment.