Elizabeth Warren, professor at HLS, speaks at UC Berkeley on changes in the finances of the typical family:

Before listening to this talk, I had always assumed that Americans had so much debt because of excessive consumer spending. According to Warren, however, the biggest increases have come from fixed costs like mortgages, car payments and education. I would say that overall it is a huge conversion of good debt to bad debt, due to an exacerbation of the principal-agent problem - in both education and in big financial decisions, I think buyers today often have a huge information disadvantage.

Warren also mentions the shift to both parents working in the typical family, and the tying up of resulting increased income in large, inflexible fixed expenditures. I think most people underestimate the fragility that results from such an arrangement, and still follow the same expenditure patterns as the last generation, and that is the cause of a lot of the inefficiency - it is the result of overestimating one's capacity for risk.

I wonder what the analogous development in Asia would be.

Hat Tip: Economist's View.

Real Linux and a BSG reference!

I've seen references to the observation that Asia lacks a dominant financial hub in two places now:

1) McKinsey Global Institute: Mapping Global Capital Markets - Fourth Annual Report executive summary page 13:

Notably, Asia lacks a single dominant financial hub and has relatively weak cross-border financial ties in the region.

2) Newsweek: What Power Looks Like page 1:

Recalling an earlier crisis in global securities markets that he helped to manage, Geithner said the Fed brought together the leaders of the world's 14 major financial firms, from five countries, representing 95 percent of all the activity in global markets. The Swiss were there, the Germans were there, the British were there. Interestingly, no Asians were there, not even the Japanese.