Litigation

  Now that NYU law student Jeremy Babener has submitted the "final" version of his paper (attacking a statistic that he opines is the flawed basis for the structured settlement tax subsidy) for publcation, expect the dissipation myth "Bab-oons" to howl in pedantry.

Ironically Chief "Bab-oon" Patrick Hindert, who described this piece of work as "seminal", and  who was singled out for thanks by Babener,  and who has described Babener's "lynch pin" as part of the "pernicious" lies promoted by the industry, testified before Congress about the very point that he now attacks (cited by Babener p5 footnote 19). In addition he has continued to promote the squandering plaintiff theory as recently as last August.

As someone known to attack certain industry business practices in an effort to "clean up the neighboorhood", it would be hypocritical of me to not be in favor of efforts to clean up misinformation or mischaracterization that is out there. So from that angle I applaud Babener for his efforts.

Yet I'm puzzled by the notion that Babener has missed these statistics among many others which bear relevance to the spendthrift proclivities of Americans.

• Half of U.S. Adults received a failing grade for their knowledge of basic economic concepts Source: Young Americans Center for Financial Education-Financial Literacy Statistics

• About 20% of US households (22.2 million families) are not using mainstream insured financial institutions. Source:  Center for Financial Innovation, cited in the Denver Business Journal 2007

• In 2006, the US Commerce Department reported that in 2005, the savings rate was negative, for the first time since the Great Depression era ( 3 years before last year's market collapse)

• A 2007 Harris Poll in which 49% of respondents claimed they don;t know enough about financial planning.

• The Richmond Credit Abuse cite that "The number of bankruptcy petitions among 18-24 year olds increasing by 96% in the 10 years"

• A 2006 article by Tamara Draut entitled "Strapped: Why America's 20 and 30 Something's Can't Get Ahead"

• Only 1 in 3 teens knows how to read a bank statement, balance  check book or pay bills: Source Charles Schwab Teens and  Money 2007. The same survey results said that only 45% of teens know how to use a credit card while just 26% understood the fees  and interest.

• According to the JumpSart Coalition, of the 6,000 students who took JumpStart personal finance survey in 2006, 62% received a failing grade where 60% was the lowest passing grade

• Mispercepton by teens of what they will earn when they get older-Charles Schwab Teens and Money 2007

From the Indiana State University Network Fianncial Institute  (www.networksfinancialinstitute.org)

• Credit card debt among 25-34 year olds increased 55% since 1982, while 18-24 year olds increased 104%

• 53% of parents agree that tehir child thinks money grows on trees

• 76% of parents surveyed said their high school student has no budget

• 88% of parents feel that it's important to monitor their child's safety and guide their money use.

Let's add to the above that 43% of 18-29 year olds and 53% of 30-64 year olds expressed concerns of outliving income after retirement, according to a January 30-February 2 2008 Gallup Poll  According to a Met Life Employee Benefits Trend Study conducted in 2003, 48% of employees rank "outliving their savings". The fact is that people are living longer. According to the New England Centenarian Study, the top two fastest growing age cohorts are those over 100 and those over age 85.

Need I go on?

Despite Babener "not seeing the  direct relevance" of the above, the fact is that the government already subidizes and encourages retirement planning and savings by permitting tax deferral of gains on consumer purchases of annuities. The government is already is looking to encourage the purchase of income annuities from retirement plans as longevity insurance through introduced legislation. Why do you suppose that is? It's all relevant. Shit happens and it doesn't discriminate by age or social strata.

Even if one concludes that there is no difference between a tort victim and the average Joe from a financial literacy standpoint, or from the point of view of "propensity to squander" and questions why tort victims deserve something extra, consider that there is a HUGE difference between the two. This is because the tort victim MAY NOT have the physical or mental ability to earn back mistakes.  One mistake for consideration...Morgan Keegan, a Memphis firm is now facing arbitration charges related to "safe" bond funds that lost more than 78% " Source: Different Form of Justice"  by Janet Paskin in Smart Money August 2009 p 15.