Use access key #2 to skip to page content.

TMFBro (< 20)

Economics Journalist Is a Financial Wreck

Recs

16

May 17, 2009 – Comments (1)

Should we mock or pity Edmund Andrews? Or commend him for publicly donning a hairshirt and putting a few more faces on the current crisis? 

Andrews is a financial journalist for the New York Times who recently confessed his sins in an article (with more details available in a forthcoming book). As he explained in the article's first two paragraphs: 

"If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.

"But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds."

The story has it all -- divorce, debt, deceit, delusions, and dumb decisions.  It's quite a read. I'll just highlight the role relationships played. First, Andrews gets divorced from his wife of 21 years, with the result being that alimony and child support consume 60% of his take-home pay. Then he gets remarried, to an old friend from high school, Patty:

"In the euphoria of moving in together, we both succumbed to magical thinking about ourselves, as well as about money. My fantasy was that Patty would become an ambitious go-getter. 'This can really be an exciting new chapter of your life,' I kept telling her. Patty had a very different dream. 'I feel as if I am finally at home,' she exclaimed as soon as we moved into the house. She could settle down and do the things she had always been best at: making a new home, nurturing her children and loving me. One way or another, she figured, we would earn enough money to make good on our glorious gamble.

"We had very different ideas about money. Patty spent little on herself, but she refused to scrimp on top-quality produce, Starbucks coffee, bottled juices, fresh cheeses and clothing for the children and for me. She regularly bought me new shirts and ties to replace the frayed and drab ones in my closet. She thought it wasn’t worth agonizing over nickels and dimes. I was almost exactly the opposite. My answer to any money squeeze was to stop spending. I would skip lunch at work to save $7. If I arrived at the Metro just before the end of rush hour, I would wait for five minutes to save 50 cents on the fare."

I am reminded of a response Fairholme Fund manager Bruce Berkowitz gave in an interview. He was asked to give advice for MBA graduates entering the job market. He talked about the importance of doing what you like and finding a good mentor. But he concluded with this: "Also, it is important whom you marry. The right person will be beyond-words helpful and the wrong person will destroy everything in your life."

1 Comments – Post Your Own

#1) On May 17, 2009 at 1:27 PM, VintageCat (< 20) wrote:

Good read.  Thanks for sharing.  

Report this comment

Featured Broker Partners


Advertisement