Risky business

Cindy Sealls: 0:02Okay. We feel as though we have to give you fair warning for this episode, the beginning of the episode, we're talking about something that we actually don't know anything about because it's an economic concept and neither of us know anything about economics.

Kelley Lynch: 0:21So it seems like people are going to lose their unemployment insurance that could happen this week. And it looks like the reason is moral hazard.

Cindy Sealls: 0:38What is moral hazard?

Kelley Lynch: 0:41I don't know. Let me Google it. A moral hazard is the idea that a party protected in some way from risk will act differently than if they didn't have that protection. Ah, so I think that's what they're saying. In terms of the people who have been receiving the unemployment insurance, they're saying that they are protected from the risk. They are protected from risk. And so they are acting differently. They are not in other words, going to work.

Cindy Sealls: 1:24Why do they want people to basically risk their life? And why is it, why are they demonized for not risking their life?

Kelley Lynch: 1:36It's a very good question. Who, who let's see, who are who's who moral hazard is a situation in which one party gets involved in a risky event. Okay. Is that people staying? Are they saying that the people staying at home are involved in this risky event?

Cindy Sealls: 1:55That's why I'm saying Kelly. It seems to me that they were be the corporations who are, who want to send people back to work. They don't have a risk. So because you know what, it was like Samira, remember she was talking about these executives and they're at home, tell us , you know , and there's a zoom call sitting in their living room, telling them at the hospital what to do. Oh, okay. You know, where it comes from insurance moral has hazard is usually applied to the insurance industry. Insurance companies worry that by offering payouts to protect against losses from accidents, they may actually encourage risk taking which results in them paying more claims. Insurers fear that a don't worry it's insured attitude leads to policy holders with collision insurance, driving recklessly or fire insurance (laughing) I'm sorry. I'm sorry. It's just so okay . Or fire , fire, insured , homeowners smoking in bed. So, okay. I , as a former smoker, I just have to say that is the most ridiculous thing I've ever heard. So I'm a smoker addicted to nicotine, right? I'm sitting in my bed thinking if I smoke in bed, I might catch that , Oh, wait, I have insurance. Let me go ahead and light up. It's like smoking in a bed. Cause I'm a smoker. Damn it . And I can't help it.

Kelley Lynch: 3:35Okay. So, so what, what is the equivalent that's going on here? They're like a, they're a smoker. They're a bed smoker. So in other words, if I wasn't receiving this money, I would get out and go to work right now in normal times. Absolutely. In a pandemi?. I'm Kelly Lynch and I'm Cindy seals. Welcome to a new normal a podcast about how we're adapting to life during the pandemic and where we go from here. Our guest today is Shuiab Hassan.

Cindy Sealls: 4:26Shuiab works in mortgage servicing compliance and oversight.

Kelley Lynch: 4:30Is that your game show voice?

Cindy Sealls: 4:31That's my game show voice .

Kelley Lynch: 4:33So before we get started, because this is a longer episode, I wanted to give people some mile markers. The first 20 minutes is a deep dive into how mortgages work. So if you don't want to hear about that, skip ahead 20 minutes, or be sure to keep listening, because he's also talking about the economy where he sees it going, what you can do to protect yourself in these really uncertain times.

Cindy Sealls: 5:05And you'll hear his story.

Kelley Lynch: 5:08He's got a great story. Shuaib Hassan, Welcome to the podcast.

Shuaib Hassan: 5:14Thank you, Kelly and Cindy .

Kelley Lynch: 5:16So Shuaib, tell us what is it that you do?

Shuaib Hassan: 5:20So I'm hired on behalf of lenders to oversee the servicers who are actually doing the work to make sure that they're compliant with investor guidelines, federal and state regulations, CFPB guidelines, and any kind of local or state laws as well. So my job on a daily basis is I audit the servicer's actions. Um , so, you know, for example, we So there's requirements for various things. Like, for example, if you make a payment, it has to be posted into your account. The next day, my team will go ahead and audit hundreds and hundreds of loans to make sure that the servicer and actually did that. So my job basically is to oversee the services , uh, compliance with state and federal regulations.

Kelley Lynch: 6:19So including the new regulations for

Shuaib Hassan: 6:23Yeah. Any new regulations that come up, I just , that's just added onto my lists .

Kelley Lynch: 6:29One of the big reasons we wanted to talk to you was that I've got this concern that I might be putting my house in jeopardy. I called the mortgage company the other day and they said, you've got three months. So that's great. But at the end of that time, I mean, I, I thought that the terms might be okay, well we'll put those payments on the back of your loan and then everything will be good. But in fact it is a forbearance. And so I had to look that up in the dictionary and it was basically saying everything's going to come due after three months. So basically in August, I'm going to owe three payments. And so I was like, but there are so many people who are in this situation where they have no work. I mean, I'm a photographer. I'm supposed to be traveling around the world, but I am not able to travel right now. So all of us are not magically going to have money at the end of three months. So I thought,

Shuaib Hassan: 7:37What are your options? Yeah .

Kelley Lynch: 7:39What are we doing ? How do we do this?

Shuaib Hassan: 7:41Well, so kind of back off a little bit and kind of explaining the whole mortgage cycle and how it mortgages is actually work. So usually when a person decides to buy a house, they go look for a mortgage. Usually they'll go to their bank or credit union, but they'll often also go to small lenders who are not a depository institution, like a bank. These lenders, when they originate a loan, they basically strip the asset into two parts. One is the promise of the future cash flows or the mortgage loan, right ? So the borrower's interest and principle payments that is separated and sold to an investor. An investor obviously is willing to take that risk because they want to benefit from all the interest payments you're making over 30 years. Now, investors are not in the game of managing borrowers' expectations or handling borrower communication and so on. They are purely investors and money people. They don't have a call center, they don't have a collection center. They don't have a way for borrowers to call them and say, Hey, what is going on with my hazard insurance, for example, or why did my property taxes go up? So then they have to hire a sub servicer who will service the loans on behalf of that investor and for that service, the subsurface . So we'll get a small fee on a monthly basis to basically help the borrowers in case of need. So another asset that's created is a thing called a mortgage servicing, right? MSR. It is the right to service that mortgage. What generally happens is Cindy's mortgage shop will go ahead sell the loan to the agencies, but they will keep the MSR, the servicing rights. And so what that means basically is each month you make your mortgage payment, right? You will make a mortgage payment to Cindy's mortgage shop. Cindy we'll go ahead and remit that payment to the investors, whether it's Fannie or Freddie or whoever else and return for that, she gets a fee of, let's say, $75 per month. So if you think about it, if a lender has thousands and thousands and thousands of mortgages, and all they're really doing is remitting a payment to investors and getting $75 a month for 30 years, that's a very beneficial asset.

Kelley Lynch: 10:11That makes sense. Despite my brain wanting to be like, no, no, no mumbo jumbo, but I've got it. Okay. That makes sense. So my bank is the institution that has been interfacing with me on that mortgage and making that small amount of money for doing that.

Shuaib Hassan: 10:29Right? So, you know, their jobs are fairly easy when everyone is paying their bills. Because all they have to do is remit the principle and interested investors. But obviously it's not that great when things like COVID happens or borrowers are delinquent and they have to try to collect or during the crisis when they had to foreclose on millions and millions of properties. So their job is basically to interface with the borrower on behalf of the investor. The hope is that the borrower continues to make payments. Everything is all good. If the borrower does not make payments, then the investor's rights under your note is that they can foreclose on you. And the servicer will go ahead and exercise the right of the investor to foreclose on you and your property so that the investor can liquidate that asset and get their money back that they paid up front .

Kelley Lynch: 11:20So that was 2008?

Shuaib Hassan: 11:22That was 2008 .

Kelley Lynch: 11:23And a lot of people lost their homes. And we were talking about this just the other day, Cindy and I, the idea that towards the end of the crisis, it seemed like maybe the banks were going to try and work with people because they had so many properties.

Shuaib Hassan: 11:38Well, what happened during the crisis was the government got involved, right? So a lot of these banks were financially in trouble and in order for them to receive government help, they had to adhere to government regulations that they set up to help borrowers that were in danger of not making payments or falling behind o n payments. So they were kind of doing it obviously because their hands are forced. But then also I think a lot of investors r ealize that a ny c ashflow is better than no c ash f low. So in the normal environment, when you have to foreclose on a property house, prices are going up, investors benefit because they can sell that asset b ecause usually house prices will appreciate. And so they actually make money doing that. But during the crisis, we were in a continuing declining house price environment. So it was no benefit for them to take ownership of these properties. It was better off for them to have people make payments until a time when market prices came back up and then hopefully they could refinance out of it or the investors at that time could take the property and liquidate. So that actually has basically, that's a good segway to what's going on now. That environment set up this whole forbearance plan that we are seeing now. Because of the 2008 crisis, it said the precedent on how to help borrowers and really understand what's best for investors and what's best for borrowers are actually aligned. And because of that, the new initiatives o f forbearances, modifications, repayment plans have really been in Vogue. Prior to the crisis, there wasn't as many options for borrowers to get help.

Kelley Lynch: 13:26Still. We end up back where, I mean, the forbearance thing is, is actually impossible. You know , people are not making any money. How are they going to pay for months at one time?

Shuaib Hassan: 13:37The problem with this whole industry and right now is that I have servicers that we work with. They have people that are working remotely. They have added staff to handle the call volume and that staff is not well trained. They don't understand the mortgage market. They don't understand the directions of Fannie, Freddie and so on. So what actually happens is you can request a forbearance plan for up to six months. And if you need another forbearance plan after that, they can extend it to an additional six months. So you actually have a 12 month timeline for a forbearance plan. Now, what happens at the end of the forbearance plan? Obviously the idea is to really help borrowers who really need help. And so it could be that you ask for six months, but your job comes back in two months or three months. So the idea is to help kind of bridge borrowers to the point where they get employment back up and they have income and so on. At the end of the forbearance plan , each situation, each case will be different. So you might, for example start working again in a couple of weeks, someone that might be on a cruise ship is not going to be working probably until 2021. And all that matters because at the end of the day, you still owe that money to the investors. You still owe that principle and interest to the investors. Now this whole thing was a disaster from the beginning because of the media, really. What we heard first from borrowers was they thought this was just a complete bailout . Like I don't have to make my mortgage payments at all. And it's just all good and done. And I can live mortgage free in my house for three months, six months, whatever. And that wasn't the case, but I think the media, the way they spun it, the way they said it, the way people read a 120 character tweet and that's all the information they have, they were under that assumption. What really happens is the Fannie Mae, Freddie, Ginnie Mae, all these organizations have set up pretty clear guidelines on how to help borrowers. At the end of your forbearance plan, you fall into this area called loss mitigation. And loss mitigation is really there to help borrowers become current. Again, it's the idea that preventing foreclosures h as the best thing for both the investor and the borrowers and the public in general. And loss mitigation programs are specific to each investor. So when I'm talking about loss mitigation, there are four things that you c an do in a loss mitigation. One is the most common thing, which is a modification, right? And that was what we saw in 2008, w here these massive modifications t hat h elp borrowers forgive past amounts of debt, basically lower interest rates because they had original i nterest rates at 6%. Now the market rates were 3%. So that made it much more affordable. So you will still have the option to modify your loan at the end of your forbearance plan. Should you meet the requirements of, maybe in your case Fannie Mae. Fannie Mae will have their own modification guidelines, which may be different than FHA, t han Freddie Mac, t han whoever else. So there's a repayment plan, there's a modification, and then there's a deferral. Those are your options at the end of your forbearance plan.

Kelley Lynch: 16:51So how do you find out exactly which one? I mean, because it is almost impossible to talk to somebody and to understand what's possible.

Shuaib Hassan: 17:00All these organizations, Fannie, Freddie and so on, they have all our guidelines and programs online. So you can go see what their loss mitigation options are. And they will actually tell you the criteria for each one. So you can see which one fits your needs. Again, it's very borrower specific. It's case by case basis depending on the nature of your hardship, how long it will be , how much you might have in savings. You know, we deal with situations where that, you know, people could be going through divorces. People could be going through medical emergencies, life illnesses, things like that. And so these programs are pretty flexible. And then they, you have to try to understand what that person's specific situation is, see which of these options best fits your needs. And the other thing you could really do is there is a lot of good consumer advocate, State organizations, and so on that you can go and get help from. So if you have questions, you can always go to your local housing authority and ask questions to them as well.

Kelley Lynch: 18:06None of us really knows what's coming. And I think that is part of what makes you think, okay, I've got a little bit of money in the bank. I might could pay my mortgage this month, but then what happens next month when I don't have enough money for food? People are weighing up these kinds of things as well. I mean, so how do you think about balancing all of that?

Shuaib Hassan: 18:30I think that the first thing that people should understand is obviously health and, you know, the immediate essential needs are number one. My advice would always be to take care of yourself first, because there are programs to help borrowers and there's programs that right now, for example, there's a moratorium on evictions and foreclosures. So there's no company that is allowed to evict a borrower from their home right now, or foreclose start initiate foreclosure processes. So, you know, that is kind of an essential thing, right? To make sure that there's a roof on your head. So knowing that I would say then take care of your immediate needs first. If it's medical expenses, it's essentials, especially if you have no visibility into the next month or the next two months, I would be conservative about that. They'll be a lot of different options for you to keep your house. And if it's more pressing needs like medical attention and things like that, that can come at a later date.

Kelley Lynch: 19:28As a freelancer, I mean, there's a different calculus in some ways, it's not so different than it's ever been because you never know when work's going to come. The difference is, I can't really travel to do that work, which is where most of it comes. And so you could have a little piece of work come in. Do you still just gauge it? Like I'm going to take care of me with whatever comes in and I'm going to just put that stuff on hold for awhile just to make sure I have enough money.

Shuaib Hassan: 19:57Yeah, absolutely. And I think the other advice I have to give to everyone is to be honest and communicative with your mortgage servicer lender. I know they've had a bad rap since the crisis, but they honestly want to do what's best for borrowers. And like I said before, everyone understands that the borrower's best interest and the investor's best interests are aligned. Investors want borrowers to keep on paying and borrowers obviously want to be in their homes. Be honest with your mortgage servicer. Call them and tell them what the situation is. When we talk to servicers, they say the people who are the most transparent and the more honest are the ones that we're more willing to work with and they will work with. And again, one of the things that people don't really understand is the servicers are there to help as a borrower. They have no interest in you defaulting on the loan. Their job becomes increasingly hard and difficult if a borrower defaults, because now they have to deal with the legal process of foreclosure; they have to maintain the property; they have to do inspections and so on and so on. They would rather you just make your payments and they get their fee and lifestyle good. And Fannie and Freddie and FHA and USDA, and all these companies, they actually scorecard these servicers . And one of the things they look for is how effective are they at helping borrowers resolve their billing issues'?

Kelley Lynch: 21:38So is there scope for other new rules going forward?

Shuaib Hassan: 21:44In 2007 when this happened, when the crisis happened, none of the programs available were even a thought in the industry before it happened. They were reactive to the challenges we saw at that time. There was no mechanism for modifications or forbearances or anything like that. All that was a reaction to what happened. And right now we are facing a challenge that nobody knows anything about. No one knows how long this will last. No one knows what the consequences are longterm for from kind of an economic perspective, but also from just a social perspective. And my opinion is that, we have learned from 2008 and what we just saw in March with the federal reserve, kind of stepping into the equities market that people can write any rules they want now. And so we've come to this environment where people will take action and by people, I mean the government investors and so on, and they'll take quick action now to reduce risk for both the people as well as themselves. I think the problem we have is that as a market, I cannot tell who is truly affected and who is not. And whether the same benefits should be offered to everybody. By that I mean, one of the biggest things that we see is a lot of the people that are asking for forbearances aren't like Kelley. They're actually pretty wealthy people. And what they've done over the past few years is accumulated Air BnB assets, for example. They're asking for forbearances because they over leveraged themselves. They bought 10 rentals. Turned them into Airbnbs. Things were great. They have a lot of money in the bank. Now, obviously the Airbnb market is shut down. They're asking forbearances and help. Okay, should we help those people versus should we help really the people like Kelley who actually had good intentions and live within her means and happened to be directly impacted by this unfortunate situation? So I think that's kind of the challenge now is to figure out how we can segregate the people that were truly affected by this versus the people who are trying to take advantage of the system. Because, you know, in 2008, a lot of people took advantage of the system as well. So I think that's the challenge really now is figuring out how we can get the most bang for our buck and really help the borrowers who are true and true need who want the help and who really need to help. Growing up in Afghanistan, I never ever dreamed of having a six bedroom house, a five bedroom house or anything like that. Having a roof over your head doesn't mean having the best house you can possibly buy or being in the best neighborhood. It means you make sacrifices in times like this.

Kelley Lynch: 24:54So what do you see when you look to the future?

Shuaib Hassan: 24:58I honestly see a pretty scary future only because we just don't know anything about this virus. And we don't know if it's going to last another six months in a year. We don't know what the impact of it is from a health perspective yet. A lot of people are basically looking at death as the e nd point measurement of this virus. Growing up again in Afghanistan, growing up with malaria, tuberculosis, polio. People re covered f rom polio, but we all know people really didn't recover from polio. So we just don't know much about th is v irus and what it can do lo ng term t o people's health and so on. So I think it's scary in that sense. I think also 30 million unemployed people is not something to just overlook. Thirty million people and the estimation might be up to 50 million people. I think we have about 150,000 maybe or so 150 million people that are in the workforce. You're talking about 25, 30, 35% of the workforce being unemployed. How long will they be unemployed for? And what does that mean? The government has done a great job of acting quickly and helping borrowers or helping people. The PPP program has been a good thing. The stimulus checks, you know, I know it's a small drop in the bucket, but it's helped some people. Unemployment insurance has been strengthened. But how long can the government do that for? As an economist, there's consequences to everything. So t he society still has to pay for this somehow. Y ou k now, when the government prints three, $4 trillion of money for a three month, bandaid, that has longterm consequences to the country and people don't think about that. So my fear is that put in, I think, I d on't know the latest, but five or $6 trillion of help t hroughout corporate help and to help with people for a three m onth bandaid. What if this lasts the fall? What if this lasts at the end of the year? How much more help can the government give to corporations and people? And you're kind of in a bind either way. If they do provide help, that might help things a little bit. But again, there's longterm consequences of that. If they don't, then we are falling into the great depression again. So no one knows what's going to happen beyond July, August. And that's the kind of scary part to me is I don't know. And I don't think these people will get their jobs as fast as they think that they will. Even if they do, even if you s tart working Kelley, you know it's going to be very p hased, right? Y ou, it's not like you're going to ramp up to a hundred percent capacity quickly. T here's going to be limitations of travel for a long, long time. So, you know, you may start working locally again or going to different States, but for you to travel internationally could be well into 2021. And the same way with hotels and restaurants and things like that, you know, 25% capacity. And then maybe three months later at 50% capacity and so on. So I think the future looks scary. And I think that house prices , depending on the government help, I think they will crash. Um, probably about 12 to 18 months would be my guest once everything's kind of through the pipeline. I do think that house prices will kind of readjust to a level that's a lot lower than it is now. We just don't know where the longterm impacts are yet.

Cindy Sealls: 28:41If you had some kind of financial advice to give to people, you know, say for the next six months, what would be three basic things you would tell them people to do?

Shuaib Hassan: 28:51Well, number one, during these kind of times, cash is always King. And I would tell people to have a majority of their assets in cash. Cash gives you an optionality that other investments don't. Normally, I would tell people to keep three to six months of expenses on hand. I w ould tell people to keep up to a year's of expenses on hand. The second thing I would do is have people assess their spending habits right now. I think during a contraction, we all kind of need to be better at managing our finances. Doctors, lawyers, people in my business, we're all getting salary cuts. We're all getting pay cuts. No o ne's not a ffected by this. Everyone's affected by it. My brother is a doctor and he says half of his staff were laid off because elective surgeries were stopped and so the hospitals couldn't afford them. I have lawyers, friends who haven't billed anything because the courthouses are closed. People in my space lost their commissions. People have been asked to take salary cuts. I myself expect that if the worst happens, a lot of my clients will go out of business. And so I have to be cautious about that and say for an extended period of time. So my message would be, it doesn't matter what you do, don't think you're out of touch by this virus and the effects of it. Like I said, everyone that I know has been affected by it one way or another.

Kelley Lynch: 30:20When you talk about cash, that just mean money in the bank. That's not tied up.

Shuaib Hassan: 30:25It's not tied to an investment. The cash is liquid. It's there for you to reach whenever you need it.

Kelley Lynch: 30:31You know , because so many of us don't understand many of these things. Is there a danger that you go to the bank and your money is not there?

Shuaib Hassan: 30:41No , that was a danger in 2008, but because of that, we put so much focus and regulation on the banks. The banks are actually the ones that are being asked to help right now, which is kind of funny, right? Because they were the ones that kind of caused the 2008 crisis that needed bailout . But they are actually in one of the best financial positions of all industries right now. They're pretty strong. They have a lot of cash, a lot of reserves. And the federal reserve is basically pretty much ensured that banks will not run out of money.

Kelley Lynch: 31:12But what they're doing is basically, as I understand it, printing money, what are the consequences of that then in the long term?

Shuaib Hassan: 31:19Our government isn't run any different than a household, right? So the printing money is adding to the debt that we have. So just think about what happened in your household. If you're running up debt quickly and rapidly, at the same time, you got 30 million people that are unemployed. So income taxes are going to go down. Revenue generation from taxes, from sales taxes, business taxes are going to go down. Everything has been shut down, right? So any household that incurs debt that yet reduces income, that's not going to be a good thing. I don't know what the longterm effects will be and how long they can do this, but it's basically, it's as simple as that. As simple as any other household, you cannot carry debt. You cannot increase debt and lower income revenue generation at the same time.

Kelley Lynch: 32:07Going back to that idea of having three months, six months, a year's there's expenses in hand again. I think for those of us who cannot make that, who can't make those three payments at one time, we also don't have. So what do people do?

Shuaib Hassan: 32:34I think, you know, again, every situation is different, right? Whether you're by yourself or you have a spouse, does your spouse work? You know, those kinds of things. I think that the best thing anyone can do at this time, like I said, is reassess your own financial situation, including your expenses. Sure, you may not, you know, someone may not have a ton of income and they could save, but do they have do they have good discipline in managing their expenses? So really be honest with yourself with that. My friends always joke because, you know, I do pretty well financially now, but my friend likes to call me a child of immigration. And he says, you'll still live like an immigrant. And you know, so my advice is based on that, you know, for example, I have no problem selling old things to raise cash, to put in a bank. I had a couple bikes a couple of weeks ago, but I haven't used for a long time. I did sell them and I generated four or $500 and I put that in the bank. So little things like that, I think people, you have to be resourceful right now, you know. So first assess what you can kind of stop spending money on, but look around you and see what you can do t o r aise s ome cash. Could it be maybe being a delivery driver for a while? Could it be picking odd jobs here and there? You know, grocery stores are hiring those kinds of things. And again, I think it's this whole idea of that A mericans don't like inconvenience and for again, for child of immigrants, when we did whatever we could survive.

Kelley Lynch: 34:21So tell us about how you came to be in America.

Shuaib Hassan: 34:25So I was born and raised in Afghanistan. I was born in 1979. So the year that the Soviet Union invaded it's a good year to be born. So during the invasion, my dad actually left Afghanistan for the US. He happened to meet some American backpackers in t he early seventies, u m, college students who he befriended. And by the time the war started, he tells me that he basically was keeping in touch with them. A nd t hey a ctually lived here in Denver and he connected with them and they helped h im get asylum and come here to study. So he left in 1979 a nd my brother and my mom and I were there with our extended family. And we lived there until 1990. So the first 11 years I spent there, obviously a majority of that 11 years was during the hardest part of time i n the war with the Soviet union. So I grew up living in a war, torn province. My family and I lived in Kandahar. So in the South. So it was it was a very challenging time obviously, but at the same time, it's probably one of the f ondest memories I have in all my life was all the time I spent in Afghanistan. Um , you know, it's interesting because we talk about this new idea of new normal, and a lot of people don't understand what that means, but growing up in Afghanistan and during a war, I tell you, by the time I was five or six, I didn't even know that there was a war because everything was normal to me. It was normal to go to school and make sure that you're skipping away from the farms that have landmines. It was normal to see tanks rolling by. It was normal to hear the jets flying over school and so on. My school was bombed when I was in , I think, nine, right before we left. The bomb landed right outside of the door that we were in, my class was in. And I mean, I saw my life flashing before my eyes like shrapnel came and hit the table that was over me. We all got under the table as soon as you hear the sound. So luckily we h ad some protection, but stuff like that, you know? And so, you know, for me, it was always a fun time obviously, c ause y ou k now, all my family and so on was there. But it was also a very challenging time because looking back, I know what kind of danger I was in a t that time. I, as a kid had no idea what part of history I was living in. So 1990 after about 10 years, 11 years, my dad became a naturalized citizen in the US. He then petitioned for me a nd my brother and my mom to come over here. So my brother and I, and my mom, we fled Afghanistan and went to neighboring Pakistan in 1 989, right before the Soviets pulled out. I didn't k now, obviously t hey're going to pull out. At that time, we got communication from my dad that he was going to become a US citizen and we needed to get to a US embassy for him to petition for us. The only a US embassy that was open was in Karachi Pakistan. So we, my brother and my mom and I, with the help of our family and others, we literally, in the middle of the night, they put us under tarps and mattresses in this old truck and we escaped Khandahar to go to Pakistan and made our way from, we first went to a city called Quetta on the far in the border of Pakistan. Then we made our way to Karachi. And then we made our way to Islamabad where the embassy was and so on. So that was a journey, a great time, but through a lot of help from people and so on, we finally made it to the US embassy and that's when my dad petitioned for us to come here. And so that was finalized, I think, in May of 1990. And we immigrated to the US, to Denver and I've been here ever since.

Kelley Lynch: 38:23Do you remember what it was like when you first came here?

Shuaib Hassan: 38:26I remember being very excited in the airplane because I used to Afghanistan, we didn't have TVs, but we had one household that had a TV in the whole village and we would always go there. And the only show we could watch was Full House. And to me, I just always want it to be at a park. And that was kind of my thing is like, you know, obviously in the area I was in there , not a lot of grass and stuff like that, but the idea of having a picnic in a park was the only thing I could think of when I was on the airplane is "I can't wait to get you just go in a park." Um, but you know, it was exciting, but it was also very, very, very sad, right? Because Afghanistan, especially us there, we were a very community based culture. Uh, I mean, I lived in a household with my grandparents, my uncles, their wives, their kids. I think there were like 30 of us in the same household. But to leave them was probably the saddest thing, obviously. To make matters worse for us when we first immigrated to US it was my mom, my brother and I. My brother is one year younger than me. I was 11. I think he was 10. We had no English. We didn't know any English. My mom obviously didn't know any English. She had no education. And my dad left us literally, as he brought us to the US. We came to the US it was like a month with him and then he left. And so my brother and I, and my mom were in this country. We don't know anybody else. We don't know the language. My mom doesn't even have a job. It took a little while to get used to it, but it was anxiety and exciting at the same time. It was also very new, but you missed the old. It was just a very confusing state, to be honest with you.

Cindy Sealls: 40:10So what made you decide to study economics?

Shuaib Hassan: 40:13You know, this is a very interesting question, because a gain, t his comes from my childhood, r ight? And growing up in Afghanistan and being so poor and the standard was always America, America, America. A nd like everyone wanted to get to America. And we would wait for months and months for my dad to send a pen or a piece of paper from America. And it was like the greatest thing ever. But, you know, I could not understand why we were so poor and why America was rich a s a kid. And I used to ask my mom and my grandpa, that question and being kind of a religious person, they are, they would always tell me, don't worry, God will provide. That was their answer. Or it's God's will. And I used to be like, no, t hat's what did I do wrong? Am I getting punished that I live in a poor country. And so when I came to the US, I started obviously learning English first and then I really got into, ki a stock investing club in my school. I didn't know much about it, but it was a way for me to kind of learn English and hang out with kids. And that really got me into trying to understand the finance side of things better. But you know the question of again, why are some countries poorer others or why am I living in a society that's poor versus America was always something that was intriguing to me as a kid. And so I, when I got a chance to go to college, obviously, I knew I wanted to study economics before that, because I just wanted, I was so curious as to know what exactly makes a country different than other, in terms of t he economics.

Kelley Lynch: 41:54Wow. So fascinating. Is that, and what did you come to as a result of all of this? I mean, did you figure out the answer to your question?

Shuaib Hassan: 42:04Yeah. I mean, I think I , you know, I came to a lot of different conclusions and I think one of the things that I came up with is the idea of people who are used to a certain environment are only going to live up to that environment. In Afghanistan, there was no inspiration or aspirations to be anything other than what you were. And it's cultural and religious that you're kind of told that God will provide. That is the most kind of religious answer I always get from my family. And I get no matter what the situation is, if we don't have food on the table and I'm worried about food for tomorrow as a kid, my grandfather would say, don't worry, God will provide tomorrow. And so for me coming to more of a capitalistic society, I kind of switched my mind to, I don't need to put my future in God's hands. I will take reins of it. And so understanding that these people in these countries like the US, they live in a capitalistic society, which kind of fosters that initiative, that drive, that want to do better than your neighbor, that, you know, keeping up with the Joneses. And to me, that's the great part of capitalism. And I think that it's not by chance that most of the developed and rich countries are capitalistic societies. So that's kind of my thinking as to what makes it different. I think also obviously, the natural resources you have are a tremendous benefit. And natural resources along with, to me, none of this would happen without the education I received. Education really is key. Minus if you're not United Arab Emirates or someone landing in a bunch of oil, education is the biggest factor in economic progress. So, you know, for me, the capitalistic society and being an educated, more educated society are the two factors I think, at least.

Kelley Lynch: 44:13Does that, does that then mean that you've kind of left behind that religious side of life? I mean, because as a person who's from here, but goes to countries like that all the time. That's the side of life that I personally value very highly is that, that trust and fait. I mean, looking at you, you said your wife was Bangladeshi and the idea of putting your faith and trust. I mean, maybe that's what's happened as a result of my job actually, because I've , you know, when you're freelance, you're you feel like you, you are just kind of living out there in God's hands somewhere because the work comes, the work goes and fortunately most of the time the work has come instead of gone.

Shuaib Hassan: 45:05Yeah, no, and I, you know, I have a very complicated relationship with religion. Um, you know, I like to say I'm an atheist, but I'm not sure, I'm pretty sure I'm an atheist, but part of the reason I'm kind of, again, growing up in an environment where religion was such a big factor in your life, there were obviously a lot of good things about it in terms of the faith. You're right. Sometimes the poorest people have the most faith in God. And sometimes I think it's the only hope they have. But at the same time, I saw religion being used in a very negative way, right. With the Taliban and what happened with it and my family is Shia. So I don't know if you know much about Islam, but we're Shia and obviously our family was persecuted quite a bit by the Taliban and so on. And, you know, kind of growing up in that and seeing firsthand the damage that religion caused to my country, I've been very turned off by religion. And maybe it's my nine year old brain still thinking about it, and I haven't really processed it , but you know, the other thing about religion, especially in Afghanistan, right, is that the Quran is an Arabic. We were taught in Farsi and I've read the Koran since in English. Now, looking back half the things I was told, wasn't true. And again, knowing that people can use religion in different ways and a lot of people use them in negative ways. It just made me lose faith in kind of religion and not just this long , but just really religion in general, because I think you all know that it happens in all religions. There re times, like you said, like, Oh God, please let this happen. Or please make this go away and stuff like that. Um , but looking from a very practical perspective, I just have a lot of bad tastes, but religion and God. And one of the other stories was that when we came to the US, we were sponsored by a Catholic church and that's how we usually immigrants getting sponsored. And so this church was going to provide us with the couches and clothes and so on to kind of help us acclimate to the new culture. But one of them asked us to convert and I said, no, we're Muslim. And she said, the reason that you were so poor was because of the belief, your belief in your God convert and you will live the life that we live. And that really, really annoyed me. And I just, we did not take one bit of help from that church after that. We just left and t hen never went back to that church again. But stuff like that throughout my life has kind of made me have a really bad taste i n religion, you know?

Kelley Lynch: 48:12So when you think about a new normal, what does that look like from your perspective?

Shuaib Hassan: 48:20It's going to be inconvenient. And that's the only way I can put it. It's going to be inconvenient and Americans don't like inconvenience as we can see by the protests and things like that for basic orders to have some safety and health , but it's going to be inconvenient. I think we're going to live in a society where we are going to be wearing masks for awhile . There's going to be social distancing. There is going to be limited number of people at the malls or the stores or those kinds of things. I think also, like I said earlier, i t i s going to be inconvenient for people from an economic perspective. I think just like the great depression a nd people, you know, there are stories of the great depression and how people were s ociable at that time. I think that i s a n ew normal for people. Like I said, I think there's going to be a lot of people that need to downsize. I think there's a lot of people that really need to become humble and take the j ob that I can get rather than the job they really want, u nderstanding that this is all temporary, but I think that that's how we have to live. And it's going to be inconvenient to not get on a cruise for the next year or something like that, but it's going to be the new normal. And I think people need to kind of accept that and really believe that that's what's going to happen.

Cindy Sealls: 49:35Are we bound to adhere to the principles of capitalism as we know them today? Or could this pandemic force us or allow us to modify or adapt capitalism in a different way that works better for most people?

Shuaib Hassan: 50:04Yeah, I think that's a great question. I think that what we've seen over the last three, four months with corporations and what's going on with people, it's not capitalism. Bailouts are not capitalism. Government help, by nature is not capitalism. The whole idea of capitalism is the strong survive. The weak ones don't. Other ones will come and take their place and so on and so on. What the fed has done really has been socializing the corporate world. And, I think a lot of people hope, and I certainly hope that that movement goes towards the general population, not just the corporations. But really that's what you're seeing is the corporate world has become socialized. When you have companies like Carnival Cruise lines, who first of all, was a big problem in this pandemic. They have shut down all their cruises. They're docked somewhere. I don't know, even know where they're docked, yet they get $5 billion from the government. They have no business right now. They have nothing going on. Their stock price keeps on going up every day. So to me, that's going a little too far, and I think that kind of wave of capitalistic socialism's already kind of come about. And I think it's a matter of time before really the people asked for it from a social perspective. You know, Bernie was probably ahead of his time a little bit, but not by much. Um, you know, it seems like a lot of people seem to be okay with the idea of bailing out of these companies, but not universal healthcare during a pandemic, which is absolutely crazy to me. So I think that, you know, a lot of the hoping that some of the changes that will happen here is people really understand what the word essential means. They have a term for essential business, but they don't have a term for essential socialism when it matters to healthcare. For example, our health is essential, not the airlines, not the cruises , not the hotels. If anything, this kind of pandemic highlighted is the lack of healthcare in this country. The fact that there's people are uninsured during a pandemic and the United States has absolutely crazy. I probably, you know, would have never guessed that I would have to worry about my health in the U S when I left Afghanistan, but that's where we are now. So, I think that's a matter of time before people really demand that from our government. We talked about this idea of helping borrowers as well during this pandemic, that is something that I have a different perspective from then kind of most socialistic kind of thought. I believe that everyone has a right to a roof. I don't think that the roof has to be the same for everyone. I don't think everyone has to have a six bedroom house in the best neighborhood or those kinds of things. And I think that people are basically expecting that they have the right to have the biggest house there is and if they come to a tough time and stuff like that, then help me. I don't believe in that from an economic perspective, but also again, from kind of growing up in Afghanistan, and knowing that you can do without this gigantic seven bedroom house. That's not really essential. That the money could go to education. The money you could go to healthcare - those are the things. So, I honestly hope that more people kind of realize that they need to live within their means. And I think that, you know, the idea of a three month formal savings plan really went out of Vogue in the last 10, 15 years. Um, obviously it was pretty big after the great depression. And obviously a lot of those kids who were born in the fifties and sixties, I had parents who lived through that nightmare. It was instilled in their brains. They understood it growing up in Afghanistan. I understood the importance of it. Um, I understood the importance of there is no government help for you. But I think now, because people expect as government health , they're not taking personal responsibility for their own kind of financial position. And I understand that some people do live paycheck to paycheck and they can't, they can't save up, but I'm not saying save up three months of expenses over the course of three months or six months. If it's a year, if it's two years, if it's three years, when I first started my job out of college, it took me about two and a half years to come up with maybe two months of my rainy day fund. But I made it happen. You know , I saved, I try not to spend. The most important thing for me was to come up with a couple of months of savings just in case anything happened. So, I'm hoping that people will realize that they can't just rely on the government for help, especially during these kinds of times.

Kelley Lynch: 54:44Just looking at what has happened in your country perhaps it's a very cynical way to look at it. But part of me says, there's something to do with this system that we live under that has allowed that to happen. This capitalist system that is about corporations, specifically big defense contractors and other people making a lot of money that has been part of what has allowed that conflict to drag on and on. Does that ever figure into your thoughts about this system and about living in America and about what might be able to happen, sort of a new normal?

Shuaib Hassan: 55:30The whole idea of capitalism is what made America great and what makes America so great, right? I think that the problem with it is that we're much more of kind of a global world. And I think that a lot more Americans are now more better traveled. They understand the world better and, you know, they deservedly want certain rights that, you know, other countries have, you know , free healthcare, universal healthcare rights education, and those kinds of things. I don't wish for capitalism to go away or to be reduced or watered down. I'm a true capitalistic guy. And, you know, Warren buffet has one of the famous quotes is he's a card carrying capitalist . And he actually has a card that he carries in his pocket every single day. But Warren also has contributed 99% of his money to charity. He lives in the same house he bought in 1950 in Omaha, Nebraska. He drives an old Lincoln. Goes to McDonald's every day. So, you know, I think that the problem with this has become the people who want more of a socialist environment, they are trying to make the other side, the capitalistic side, completely evil, and the capitalist wants to make the socialism completely evil. And I think there's a middle ground that really needs to be discussed and really focused on. But that's been kind of a dialogue over the last God knows how long, is socialists and capitalists are bad. Capitalists think, you know, socialists are terrible people and they're the worst and so on. I think that corporations can do their part by being more socially responsible. By mandating paid time off for their employees, providing more healthcare options, things like that. But I think the government has to lead the way. If you leave it up to the companies, they're not going to. I mean, their main job is to make money for their shareholders, but the government has to lead the way, one by doing it themselves and two, by incentivizing them. You can either incentivize them or you can punish them. So you c an either raise corporate taxes or make i t a way where you are incentivizing them by giving them tax benefits and things like that. But I think the government has to lead the way in terms of making corporations b e more socially responsible.

Kelley Lynch: 57:48And in an environment like what we find today is that realistic or are possible?

Shuaib Hassan: 57:56It's possible. I think, you know, bottom line is I think that the government, again, they're the leading force. I mean, they are, you know, people look at Amazon or Microsoft to take care of their employees. Well, that's really not Microsoft or Amazon's job to take care of their employees in terms of the basic needs human needs. That's the government's job . Sure, Microsoft has to, and Amazon has to pay their people well; have a good safe environment and so on. But you don't know if you're going to work at Microsoft next week or tomorrow or whatever else. For me, it's scary because I have two little kids and knowing that my healthcare for my family is dependent on my job, it's scary. And that shouldn't be my company job, because again, tomorrow they could let me go because of this covert environment. And it's no fault of me or them. A lot of good companies are gonna shut down. A lot of good people are gonna lose their jobs. They're not going to have healthcare. That's not corporate responsibility. That's the government's responsibility.

Kelley Lynch: 59:04We have been sold a vision of this American dream. That is a bigger car, a bigger house and, and it's material goods. That word enough, just doesn't figure into that.

Shuaib Hassan: 59:16No, unfortunately, obviously the government kind of encourages that, too. If you look at the economy, 70% of the GDP is consumer spending. That's one of the reasons why I think the government will have every incentive to make sure that borrowers, people are getting cheap money, cheap access to money, keep raising their debts. The consumer is such a big part of the US GDP and that's a huge force. And that we're all dependent on buying the newest ipad or the newest iPhone or upgrading to the newest truck, or constantly moving up to a new house or everything else that comes along with t hat, you know.

Cindy Sealls: 59:54Is that the way capitalism works? It wouldn't really work well if people just bought what they needed and kept it for 20 years until they had to go get a new thing, right?

Shuaib Hassan: 1:00:06No capitalism will work like that. If it was true capitalism, meaning that income levels were going up as much as your GDP. Incomes aren't rising as much as relative to the GDP. And especially if you look at income with a certain groups, right? The ga p s t ill w idens. We 've n ot narrowed the gap between the poor and the middle class, really. And so it would work fine if money was being flown downstream and everyone's incomes are rising and people kept on spending it and incomes are going up, people are spending it we ll, we don't have that problem. We have a debt problem. People ar en't m aking that money, but they're taking on the debt and the debt is what's keeping the American dream alive. And you know, so it 's t hat cycle, I think, of debt that's the problem, not capitalism by itself.

Cindy Sealls: 1:01:03I think we can learn a lot from, from your story, you know, about being thankful for what we do have and realizing that we could probably live on a lot less. We'd be fine.

Kelley Lynch: 1:01:36Things change fast these days. It had been about a month since our call was Shuaib and I wanted to call back and talk to him about what's going on at the moment. So Shuaib, it's great to see you again. I wanted to call and catch up with you because I know the moratoriums on evictions and foreclosures are ending in just in a few days. And I know we don't know exactly what's going to happen at this point, but I wanted to kind of get a sense from you of what's actually possible at this point, or what's workable for our economy going forward. And what are the consequences of the choices that are being made at the moment?

Shuaib Hassan: 1:02:32Yeah, that's a good question. And I think a lot of what is being discussed right now is focusing on getting money to the pocket of the unemployed people. We're not really seeing a lot of discussion on what's going to happen with these evictions and moratoriums. The thinking is if they are going to get money in the hands of these people, then they can make their rent payments and so on. When you break it down, there's the couple options we have obviously is one, do nothing; two, come up with a new stimulus bill, which they're working on right now. And then, you know, finally do some kind of hybrid where you are doing a stimulus package, but you're not taking it to the extreme they did last time. The problem with last time was that they are incentivizing people not to work in certain cases because unemployment benefits were so good that they were getting more money from unemployment and they were from their jobs. We do nothing, what we're going to see is a wave of evictions. I read an article today that a third of renters are not confident that they will make their August payment. And that's a huge concern, obviously. And if you look at the economy and where the unemployment came from, it was at the level of the kind of lower income bracket, the people that were working at restaurants, hotels , you know, places like that. They're mainly renters. They're not homeowners. And what I'm seeing in my industry forbearance requests are actually going down. And what we see is the people that requested it forbearance on their mortgages, only 60, 65% of them are actually taking a forbearance. The other ones just requested it as a precaution, but are actually making their payments. So the unemployment picture hasn't really hit that upper income bracket yet the ones that are homeowners and so on. So what's going to happen is you're going to see this massive homelessness among renters. And there is a good chance, obviously, that these moratoriums will get extended. And I think they will. Now the moratoriums, there's two tiers to the moratoriums. There was a national moratorium, but also state and County regulators can implement their own moratoriums. So I think even if you don't see some kind of a moratorium in the next bill, I think because it's, especially because it's an election year, you will see it at the state and local level where, you know, counties and so on will prohibit evictions of renters due to covert reasons. So the picture really is not clear right now. And it's obviously, there's a lot of anxiety, not only from just the renters and people that live in these areas, but also the landlords, right? They are still obligated to make payments. They borrow money to fund these apartment buildings and these other multifamily residential areas. They still have to make their payments. So even if there's moratoriums in place and we protect the people that are living in these units, we still might have a bigger problem with landlords defaulting. That could cause a different consequence where now you've got properties that might not be kept up in terms of maintenance and things like that. There might be rent increases actually. So again, if you think about the economics of things, if I have 60% of my tenants paying, but I need to make an obligation that requires me to have 90% occupancy, the only way I can do that is increase the rent on the people that are paying. So, there's a lot of different consequences of this, and I'm not sure which one's going to happen, but at the end of the day, there's not a good solution that meets the needs of the various stakeholders, the renters, the landlords, the banks that own these mortgages, these commercial mortgages. A lot of these banks, the bigger banks reported earnings last week. And by law, they have to put in to reserve certain amount of money for loss provisions that they think they'll get because of these loans they have. Every major bank increased their loan provisions for the second and third or third and fourth quarter. So the banks are thinking the picture's going to get worse. The banks are thinking that they're going to have some really bad loans coming up and they need to save money for it. So overall, I think that the general population will be taken care of through moratoriums, but I think there's going to be a bigger impact to the economy because of the loans going bad, or these mortgages are not being able to be paid by the commercial owners of these units.

Kelley Lynch: 1:07:27So what does that look like then when you think about knock on effects and other things?

Shuaib Hassan: 1:07:32They could be bailed out by the government, right? So they could go get pretty low interest rate loans from the fed and be able to make their obligations , sort of like the PPP program, right? There could be a PPP program for these commercial owners of real estate. That's one thing. They could also obviously increase the amount of money that unemployed people are getting. And either one of those basically ends up in us printing more money. I think one of the things that the lawmakers basically did with the first stimulus, it's like my brother says, when you get a patient in the ER, the first thing you do is stop the bleeding. You don't diagnose the problem at that point. You're not trying to figure out what happened or how to fix the issue. You're just trying to stop the bleeding. When the stock market went down 40% in March and the unemployment numbers came out and then it was 10 million, 7,000, 000 a week. All they could do was just to stop the bleeding by just flooding the economy with money. They didn't think about all the effects of what that will do. They didn't think about COVID and how long it might last and y ou k now, how long c an they carry this; things like that? All they did was stop the bleeding. And now I think w e're t o the point where the bleeding has stopped to a point. And now we have to try to intelligently figure out how to diagnose the problem and find a solution to i t. And the issue with this is that nobody knows the path of COVID and that's kind of causing the big problem for economist and everyone else is , you know, how long can they continue to put a bandaid on the economy? How long can they continue to put money into the pockets of people? Is it three months? Is it six months? You know, everyone is thinking maybe by the beginning of next year, we have some kind of vaccine. That's if all things go good. Even then it's going to take years probably for the economy to recover. So it's not something where, okay, we can say at the end of December, everyone's going to be back to normal and we're done with this. So what I think for us in general, for the next several years, is we are going to face in an environment where there's been so much money, that's pushed into the economy that it's going to cause inflation. And so you're going to possibly get something like the depression, where people will be unemployed. Incomes will be lost. And at the same time, you will have a higher, expense of living. We see house prices continuing to rise, right? Rates are so low housing demands, great supplies , low housing is costing more. When there's inflation the ordinary stuff that you could spend money on food, gas, things like that. They all increase as well. And the fed printing money is just going to cause that problem to be even worse. And so for kind of, for me thinking about it in the next three, five years, we're going to have this kind of inflationary environment with low economic growth, which has any economists worst dream.

Kelley Lynch: 1:10:57It's a total nightmare. So what does an average person do to navigate a situation like this?

Shuaib Hassan: 1:11:05Well, it's scary. I mean, the first thing obviously is to save as much money as possible, right? Um , you know, cut spending that's not necessary. Be smart and prudent with your finances. And honestly you have to raise money and raising money doesn't mean necessarily cash. If you look at what the companies are doing in the corporate world, they're raising a lot of debt because debt is cheap and they are saying, we need to have these credit lines just in case this pandemic goes longer or we need more money. And so, you know, my advice to a lot of my friends are in this situation is to one, obviously be prudent with finances that you have. Second, go get a line of credit. Go get a credit card. Go open up a couple of credit cards because you might need that. And for the average person, I think that you have to kind of work the way a corporation does in these environments. And every corporation is basically trying to raise enough money to weather, the unknown. I hope that you never use that credit card, but you need to have it just in case. Because as Mark Twain said, a banker is a fellow who lends you the money when you don't need it and takes it away when you do. It's much harder to have a credit card when you're, when you've lost your job. It's much harder to have a credit card when you've defaulted on a couple of loans already. So do that kind of stuff now so that you don't have to do it later. I'm personally doing that myself, you know. So I have a line of credit to my mortgage company. I've opened up a couple of credit cards. I don't need them right now. And I hope I don't need them, but I don't know. So I'd rather have that safety net, because there are a lot of unknown for the next two, three, five years.

Kelley Lynch: 1:12:51So let's say worst case scenario, you end up needing to use all of that. Or maybe you've already got debt and you're adding, you're adding and you end up under this pile of debt. I read some economists talking about in certain societies, they used to have like a debt. It was like a wiping clear of the debts. And they just sort of said, right, that's the end we're finished. And then we wipe the slate clean and everybody starts again. What happens if we've all built up so much debt and there's this inflation and basically the wheels kind of come off the car as it were. I mean, is it kind of like everybody goes into bankruptcy or what happens in that case?

Shuaib Hassan: 1:13:42Pretty much what I'm saying is not to go open up a credit card and go take a vacation or go buy an RV or anything like that. But I'm saying is when it comes to a situation where it's depression era, either your family is outside in the streets, or you can use this to make your minimum payments on food and shelter and things like that. So it's not trying to say you should be irresponsible and go do that. It's saying that for the worst case scenario, I'd rather have debt and I'd rather file for bankruptcy than have my kids and my family on the streets or them starving for food. But that's basically the option at the end of it is. If you do all these things and you are hoping when you have good, intense to pay it back at some point when things get better, if it doesn't then yeah, bankruptcy is an option or again, you know , I hate to put the corporate world in this perspective, but companies do it all the time, right? They file for bankruptcy all the time. And back in 2007, 2008, a lot of people did file for bankruptcy and sure your credit is damaged for the next seven years. But seven years is a small amount of time in the grand scheme of things. And again, we're talking about only in situations where, like I said, like , again, you don't know how to feed your kids. I'm not condoning this behavior or saying, Hey, you should be responsible. Just go rack up a bunch of debt and then file for bankruptcy. No, no, not at all. You should have every good intention, but you should, you should prepare for something like that. Right?

Kelley Lynch: 1:15:13No, that makes sense. If we just push that thought experiment just a little bit further, what happens to the economy if a lot of people file for bankruptcy or a lot, you know, a lot of people end up with this debt that they cannot, you know, let's say four or five years down the road, or even two, three years down the road can't repay? And this is debt that has just come from, from people trying to live through COVID.

Shuaib Hassan: 1:15:43It'll be the same thing that happened 2007, 2008, 2007, 2008 was a dead issue. People are over leveraged mainly in their houses, but they also use our houses as ATM for other things. Um, but yeah. So where are you going to see is obviously the banks will be in trouble. You will see unemployment because you know, it has a knock on effect of companies that need money from these banks to keep people employed, to make payrolls or to invest in new technologies or to invest in new growth ideas. They're not going to have the money from the banks because the banks are having to cover the losses of these bad loans. So there will be an impact to the economy. To what extent, I don't know. And that depends on how many people default and so on. Also depends on how prudent the banks are being in terms of their own reserves. Now, I'm not sure if you need us, but the fed requires banks to run these things called stress tests. And they just actually ran them last quarter. And basically the fed will do these extreme scenarios. What if unemployment's 30%? What if your losses are 35%? What if this happens? And they basically say, do you have enough money in reserves? Not just money overall, but just money in reserves to cover these scenarios. I think only one bank failed and it was Wells Fargo. Every other bank passed that test. So I think most banks are in pretty good shape. And they've learned from 2007, 2008. And I think the regulators learned from 2007, 2008. So I actually think that we'll be in a lot better position than we were back then because of what we learned and because they accept being prudent and they're being forced to be prudent and they are being put under very extreme stress scenarios to make sure that they can weather the storm.

Kelley Lynch: 1:17:38So 2007-8, the car was really wobbling. I mean, the axle looked like it was broken. The wheels were starting to come off. Um , we barely put them back on with some tape and some glue and whatever else. And so then we kind of go down the road a little bit further, and now it's like, it feels like, I mean, nobody saw this coming and the banks, you know, you said were doing good. And , and now, now it really looks like the wheels are gonna, you know, now it looks like really the wheels are gonna come off the car potentially. So we talked about capitalism last time and you were all for capitalism and I'm not saying that capitalism is the cause or the thing, but is there something that is structural something that is, I mean, and this might be a conversation for a much longer time, but something that is kind of like a way that we are, I don't know , structurally this somehow there's something that is just fundamentally kind of broken or something that we need to change about the way we do things.

Shuaib Hassan: 1:18:52Yeah, absolutely. I mean, I think, you know, I am all for capitalism, but I'm also very cautious of what society needs in general. Um, if you look at this, one of the biggest issues obviously is this is a healthcare epidemic and the nation from a healthcare perspective is not where a developed countries should be. I'm all for healthcare for all. Even though I'm a capitalist that has nothing to do with capitalism. That's just being part of a society. Um, so I think structurally, when we think of it, healthcare has to be number one. This is a health pandemic, and it's basically shown the flaws of our system. So, you know, even when we're thinking about this vaccine, there's still a lot of unknowns about the cost of this vaccine. Can uninsured people get the vaccine? That's a huge question that we shouldn't have to as a developed country, as one of the wealthiest nations have to worry about. So , from a structural perspective, I think healthcare is one, obviously education is another. But with so much mistruth by COVID is so many conspiracy theories and things like that, I think, this is just personal opinion, it's not fact, I think it just shows how uneducated Americans are. It does. So a few of these things I think, need to be addressed from a structural perspective. And I think that the political situation, obviously as well, you know, I think that this country with this two party system, it is designed to divide people. It is designed to have this us versus them mentality. When you look at some of the European nations and you look at Asian countries, you know, Vietnam has basically zero cases of Covid. Zimbabwe has better Covid numbers than we do. Those nations have always had a kind of we're all in this society together mentality. And we don't, and you know, no one wants to wear a mask because they can't breathe in it, or it's uncomfortable. Where the conversation should be. I'm wearing a mask because I'm worried about my neighbor's health. Somehow wearing a mask has become a political statement rather than a healthcare issue and a wellbeing issue of your fellow citizens.

Kelley Lynch: 1:21:15That's right. Thank you so much for your time.

Shuaib Hassan: 1:21:20Thank you .

Kelley Lynch: 1:21:32Today, it's still just us. We did the episode. Tanvir's asleep on the other side of the world, and we're recording this as usual, these days kind of at the last minute. So I want to go back to that conversation that we were having at the beginning. What I like is this other part of the definition. Moral hazard arises when both the parties have incomplete information about the other.

Cindy Sealls: 1:22:07That's interesting.

Kelley Lynch: 1:22:09I think that is interesting.

Cindy Sealls: 1:22:10Yeah, because let me tell you something. If the insurance companies are worried about smokers in bed, they need to go up against the daggone on tobacco industry. Cause that's, what's causing the smoking in bed. They're getting people hooked on cigarettes. So I want to smoke everywhere, not just in the bed. I smoked when I got up in the morning, I smoked as I was driving to work. I smoke at work. I smoked at lunch. I smoked at dinner. I smoked while I was watching TV. I smoked when I was in the bathroom, getting ready for bed. And then I smoked in the bed. So yeah, they have incomplete information about why a smoker smokes in the bed.

Kelley Lynch: 1:22:46So what about the , what do you think then about this situation?

Cindy Sealls: 1:22:51I think they're crazy. I'm not going to work less it's life or death. I'm not going in to work.

Kelley Lynch: 1:23:03And so what's going to happen with all of this, I suppose, is that you are, you are kicked out of your house because you refuse to accept the risk of going into work.

Cindy Sealls: 1:23:19Listen, if I'm dead, I'm going to be kicked out of the house anyway, right? So what do I care? At least I'll still be alive.

Kelley Lynch: 1:23:39So thanks for listening. We know this was a long episode, so we're not going to keep you. You know what to do. Subscribe, write a review, follow us on Instagram and pass this around. The more ears, the better. See you next week.