Educating Our Kids About the Economy

Yesterday morning I played trains with my youngest son Slate. He is 23 months old, obsessed with Thomas the Tank Engine and as cute as a button. He hopped in bed with me, grabbed four trains, and held two for himself and two for me. We then rolled our sets of trains back and forth at each other as he screamed with a smile so wide it made my heart flutter, "ready, set, go." I watched his little face, his tiny fingers and his chubby toes and couldn't help but wonder what will his future look like.

This past Wednesday I visited my alma mater Friends Seminary in lower Manhattan. The principal, a good friend, asked if I would speak to the 7th through 12th grade students about the economy. I was thrilled to be asked and so proud that he wanted the kids to learn a little bit more about the world we live in. When I arrived at the school, I knew my work was cut out for me. How could I talk about the complex issues facing this economy without putting them to sleep and at the same time make sure that I convey why this period in history is so important? I had to strike a delicate balance.

So I tried something FDIC Chair Sheila Bair talks about in her children's book “Rock, Brock and the Savings Shock,” and described why compound interest matters. I described the root causes of the crisis, primarily housing and the access to credit. I described why the cause and solution to this crisis will affect them and what I hope they will learn from it. I described what I teach my children about this moment in history and how Bair's book teaches them things that I am afraid even my husband and I forgot; the benefits of compound interest.

“Rock, Brock and the Savings Shock” is about two brothers Rock and Brock, one is a saver and one is a spender. Their grandfather pays them weekly for each chore they complete and offers them a match for each dollar they save.  One brother successfully saves -- in the process his grandfather matches each dollar saved -- and through compound interest Brock saves $512. Rock takes every dollar made and spends it on what he can afford for each dollar earned. At the end he has nothing but lots of small meaningless toys scattered about his room. Brock uses his money to purchase an expensive telescope, gifts for his parents and grandfather and then takes the remaining $50 and puts it in a joint savings account for himself and his brother. At the very end of the book a two page chart entitled “Do the Math,” illustrates how compound interest saved Brock $512 in 10 weeks.

The kids seemed to get it. When I said to the kids, let me put it this way, "you live in a world where stocks are so cheap that you can either buy a soda and chips or buy one share in a company like Bank of America or Citigroup. One share. That’s it. You are living in a period in U.S. history that your children will read about history books. You can choose to let this moment pass you by or you can pick up a newspaper, learn about this period, educate yourself about the consequences and change the outcome of your future."

Imagine what we could teach our children if we took the time to explain to them what is happening to this economy. Imagine what they could learn if, for the same amount of money as an after-school snack or a ticket to a movie, we encouraged them to buy one share in a public company’s stock. It could be Disney, Nike, McDonald's or Apple. Products that they know and use. Imagine what the conversation would look like around the dinner table when once a week they went to the computer, looked up the stock price and talked about why it went up or down?

Yesterday’s New York Times and the New York Post were flooded with reports about President-elect Obama's new, “New Deal." Plans to create 2.5 millions jobs by 2011 through infrastructure investment, rehabilitation of schools and alternative energy investments. Plans to pursue the middle class tax cut while allowing the Bush tax cuts to remain as is, clearing the way for the highest-bracket taxpayers to jump for joy, knowing that they will not be taxed at a higher rate to pay for the middle tax cuts as President-elect Obama had proposed on the campaign trail. Despite all of his critics who said his tax plan would attack the rich to pay for the poor, he will probably do what McCain had promised. Ironic!

Over the past couple of weeks, months and in some cases years, many of us have had to come to grips with the world we are living in. The other night, my dad came over to visit my boys and said, "How are you doing?" I said, "Dad, you know me, I am always the glass is half full but I am worried. A little depressed." He didn't have to ask why. Members of my family and very good friends of mine have lost their jobs, been forced to postpone their retirement, have taken second jobs and have homes that are being foreclosed upon. It’s very hard to watch. At times it makes me sick. How many of you have seen the same?

Many of you have commented on this blog that you don't want to foot the bill for the failure of the banks or the auto manufacturers and I can understand why. You feel that you did not do anything wrong, that they were not properly regulated or managed and that the burden should not be yours. Easy to understand your anger and frustration. When do we draw the line? Who will be next? Where is all of this money coming from? Why are they bailing out certain business and not mine? What are they doing to help me? All very valid questions.

For a moment, look at the other side of the equation. What about the people who do work very hard? Who could afford their home but couldn't afford the escalating cost of food and fuel? Who did save money to send their kids to school but who have lost their jobs? Who owned their home but had to mortgage or sell it to afford rising health-care costs? Who are working two jobs to make ends meet? I’m not suggesting that we shoulder everyone else’s problems but I am suggesting that before we rush to judgment, we think about the consequences.

Do you remember what it was like to live in the United States post 9/11 where we lent each other a helping hand? Where we drove cross-country to help feed one another? Where we looked at our neighbor with compassion? Where we decided no one was going to defeat us? Where we demonstrated to the world that we can overcome the worst of obstacles?

Each and every one of us probably quietly admits to overspending on one item or another. How many of us received dozens of credit cards solicitations in the mail and opened three of them when we never should have? How many of us mortgaged more than we could afford? How many of us opened a home equity line to pay for that new bathroom? How many of us thought access to credit was so cheap that it was our right to have it? More than most of us would like to admit, me included. Should we then consider for a moment that we each have to take some responsibility for what is happening? If your neighbor is failing to maintain their mortgage payments, what will that do to the value of your home when they have to file for foreclosure? How many of you have seen this already? If the company you work for cannot get access to credit because the loans on their books are defaulting and the credit markets will no longer give them more money, how will they make payroll? Will that cost us our jobs?

I am not sure what the solution is, believe me, smarter minds prevail. When my son Slate said, “ready, set, go,” I paused. President-elect Obama is doing that as we speak. He is getting ready, gathering his team, laying out the framework, setting up a road map, creating a plan and on January 20th he will go. Will it be perfect? Probably not. Will he live up to the enormous amount of pressure? Perhaps not. Will he doing something that we have not seen in our lifetimes? Yes. Do we need to put aside partisan politics and support the man we elected? Yes. Will we fail if we don’t do this together? Yes. The stakes are so high. The decisions we make today will affect the future of our children.