Risky business

Mortgages, the economy and capitalism, oh my. In this wide ranging conversation, our guest, economist Shuaib Hassan, talks about (among other things) immigrating to the US from Afghanistan when he was 11, what makes capitalism great (and how we could do better) and how the chaos in the housing market that led to the Great Recession has become a lifesaver (for those with a mortgage) during the pandemic.

Find out more about Shuaib's work here:
https://www.linkedin.com/in/shuaib-hassan-mba-7119363/

Connect with us on our Instagram feed:
https://www.instagram.com/anewnormalpodcast/

The theme music is Fragilistic by Ketsa
licensed under CC BY NC ND 4.0

Episode Transcript

Cindy Sealls (00:02):
Okay.
We feel as though we have togive you fair warning for this
episode, the beginning of theepisode, we're talking about
something that we actually don'tknow anything about because it's
an economic concept and neitherof us know anything about
economics.

Kelley Lynch (00:21):
So it seems like people are going to lose their
unemployment insurance thatcould happen this week.
And it looks like the reason ismoral hazard.

Cindy Sealls (00:38):
What is moral hazard?

Kelley Lynch (00:41):
I don't know.
Let me Google it.
A moral hazard is the idea thata party protected in some way
from risk will act differentlythan if they didn't have that
protection.
Ah, so I think that's whatthey're saying.

(01:05):
In terms of the people who havebeen receiving the unemployment
insurance, they're saying thatthey are protected from the
risk.
They are protected from risk.
And so they are actingdifferently.
They are not in other words,going to work.

Cindy Sealls (01:24):
Why do they want people to basically risk their
life?
And why is it, why are theydemonized for not risking their
life?

Kelley Lynch (01:36):
It's a very good question.
Who, who let's see, who arewho's who moral hazard is a
situation in which one partygets involved in a risky event.
Okay.
Is that people staying?
Are they saying that the peoplestaying at home are involved in
this risky event?

Cindy Sealls (01:55):
That's why I'm saying Kelly.
It seems to me that they were bethe corporations who are, who
want to send people back towork.
They don't have a risk.
So because you know what, it waslike Samira, remember she was
talking about these executivesand they're at home, tell us,
you know, and there's a zoomcall sitting in their living

(02:16):
room, telling them at thehospital what to do.
Oh, okay.
You know, where it comes frominsurance moral has hazard is
usually applied to the insuranceindustry.
Insurance companies worry thatby offering payouts to protect
against losses from accidents,they may actually encourage risk

(02:39):
taking which results in thempaying more claims.
Insurers fear that a don't worryit's insured attitude leads to
policy holders with collisioninsurance, driving recklessly or
fire insurance(laughing) I'msorry.
I'm sorry.
It's just so okay.

(03:00):
Or fire, fire, insured,homeowners smoking in bed.
So, okay.
I, as a former smoker, I justhave to say that is the most
ridiculous thing I've everheard.
So I'm a smoker addicted tonicotine, right?
I'm sitting in my bed thinkingif I smoke in bed, I might catch

(03:21):
that, Oh, wait, I haveinsurance.
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 (03:35):
Okay.
So, so what, what is theequivalent that's going on here?
They're like a, they're asmoker.
They're a bed smoker.
So in other words, if I wasn'treceiving this money, I would
get out and go to work right nowin normal times.

(03:57):
Absolutely.
In a pandemi?.
I'm Kelly Lynch and I'm Cindyseals.
Welcome to a new normal apodcast about how we're adapting
to life during the pandemic andwhere we go from here.

(04:21):
Our guest today is ShuiabHassan.

Cindy Sealls (04:26):
Shuiab works in mortgage servicing compliance
and oversight.

Kelley Lynch (04:30):
Is that your game show voice?

Cindy Sealls (04:31):
That's my game show voice.

Kelley Lynch (04:33):
So before we get started, because this is a
longer episode, I wanted to givepeople some mile markers.
The first 20 minutes is a deepdive into how mortgages work.
So if you don't want to hearabout that, skip ahead 20
minutes, or be sure to keeplistening, because he's also

(04:54):
talking about the economy wherehe sees it going, what you can
do to protect yourself in thesereally uncertain times.

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

Kelley Lynch (05:08):
He's got a great story.
Shuaib Hassan, Welcome to thepodcast.

Shuaib Hassan (05:14):
Thank you, Kelly and Cindy.

Kelley Lynch (05:16):
So Shuaib, tell us what is it that you do?

Shuaib Hassan (05:20):
So I'm hired on behalf of lenders to oversee the
servicers who are actually doingthe work to make sure that
they're compliant with investorguidelines, federal and state
regulations, CFPB guidelines,and any kind of local or state

(05:40):
laws as well.
So my job on a daily basis is Iaudit the servicer's actions.
Um, so, you know, for example,we So there's requirements for
various things.
Like, for example, if you make apayment, it has to be posted

(06:02):
into your account.
The next day, my team will goahead and audit hundreds and
hundreds of loans to make surethat the servicer and actually
did that.
So my job basically is tooversee the services, uh,
compliance with state andfederal regulations.

Kelley Lynch (06:19):
So including the new regulations for

Shuaib Hassan (06:23):
Yeah.
Any new regulations that comeup, I just, that's just added
onto my lists.

Kelley Lynch (06:29):
One of the big reasons we wanted to talk to you
was that I've got this concernthat I might be putting my house
in jeopardy.
I called the mortgage companythe other day and they said,
you've got three months.
So that's great.
But at the end of that time, Imean, I, I thought that the

(06:50):
terms might be okay, well we'llput those payments on the back
of your loan and then everythingwill be good.
But in fact it is a forbearance.
And so I had to look that up inthe dictionary and it was
basically saying everything'sgoing to come due after three
months.
So basically in August, I'mgoing to owe three payments.

(07:14):
And so I was like, but there areso many people who are in this
situation where they have nowork.
I mean, I'm a photographer.
I'm supposed to be travelingaround the world, but I am not
able to travel right now.
So all of us are not magicallygoing to have money at the end
of three months.
So I thought,

Shuaib Hassan (07:37):
What are your options?
Yeah.

Kelley Lynch (07:39):
What are we doing?
How do we do this?

Shuaib Hassan (07:41):
Well, so kind of back off a little bit and kind
of explaining the whole mortgagecycle and how it mortgages is
actually work.
So usually when a person decidesto buy a house, they go look for
a mortgage.
Usually they'll go to their bankor credit union, but they'll
often also go to small lenderswho are not a depository

(08:02):
institution, like a bank.
These lenders, when theyoriginate a loan, they basically
strip the asset into two parts.
One is the promise of the futurecash flows or the mortgage loan,
right?
So the borrower's interest andprinciple payments that is
separated and sold to aninvestor.
An investor obviously is willingto take that risk because they

(08:25):
want to benefit from all theinterest payments you're making
over 30 years.
Now, investors are not in thegame of managing borrowers'
expectations or handlingborrower communication and so
on.
They are purely investors andmoney people.
They don't have a call center,they don't have a collection

(08:46):
center.
They don't have a way forborrowers to call them and say,
Hey, what is going on with myhazard insurance, for example,
or why did my property taxes goup?
So then they have to hire a subservicer who will service the
loans on behalf of that investorand for that service, the
subsurface.
So we'll get a small fee on amonthly basis to basically help

(09:10):
the borrowers in case of need.
So another asset that's createdis a thing called a mortgage
servicing, right?
MSR.
It is the right to service thatmortgage.
What generally happens isCindy's mortgage shop will go
ahead sell the loan to theagencies, but they will keep the

(09:33):
MSR, the servicing rights.
And so what that means basicallyis each month you make your
mortgage payment, right?
You will make a mortgage paymentto Cindy's mortgage shop.
Cindy we'll go ahead and remitthat payment to the investors,
whether it's Fannie or Freddieor whoever else and return for
that, she gets a fee of, let'ssay,$75 per month.

(09:56):
So if you think about it, if alender has thousands and
thousands and thousands ofmortgages, and all they're
really doing is remitting apayment to investors and getting
$75 a month for 30 years, that'sa very beneficial asset.

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

Shuaib Hassan (10:29):
Right?
So, you know, their jobs arefairly easy when everyone is
paying their bills.
Because all they have to do isremit the principle and
interested investors.
But obviously it's not thatgreat when things like COVID
happens or borrowers aredelinquent and they have to try
to collect or during the crisiswhen they had to foreclose on
millions and millions ofproperties.

(10:50):
So their job is basically tointerface with the borrower on
behalf of the investor.
The hope is that the borrowercontinues to make payments.
Everything is all good.
If the borrower does not makepayments, then the investor's
rights under your note is thatthey can foreclose on you.
And the servicer will go aheadand exercise the right of the

(11:12):
investor to foreclose on you andyour property so that the
investor can liquidate thatasset and get their money back
that they paid up front.

Kelley Lynch (11:20):
So that was 2008?

Shuaib Hassan (11:22):
That was 2008.

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

Shuaib Hassan (11:38):
Well, what happened during the crisis was
the government got involved,right?
So a lot of these banks werefinancially in trouble and in
order for them to receivegovernment help, they had to
adhere to government regulationsthat they set up to help
borrowers that were in danger ofnot making payments or falling

(11:58):
behind o n payments.
So they were kind of doing itobviously because their hands
are forced.
But then also I think a lot ofinvestors r ealize that a ny c
ashflow is better than no c ashf low.
So in the normal environment,when you have to foreclose on a
property house, prices are goingup, investors benefit because
they can sell that asset because usually house prices will

(12:21):
appreciate.
And so they actually make moneydoing that.
But during the crisis, we werein a continuing declining house
price environment.
So it was no benefit for them totake ownership of these
properties.
It was better off for them tohave people make payments until
a time when market prices cameback up and then hopefully they
could refinance out of it or theinvestors at that time could

(12:43):
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 thiswhole forbearance plan that we
are seeing now.
Because of the 2008 crisis, itsaid the precedent on how to
help borrowers and reallyunderstand what's best for

(13:04):
investors and what's best forborrowers are actually aligned.
And because of that, the newinitiatives o f forbearances,
modifications, repayment planshave really been in Vogue.
Prior to the crisis, therewasn't as many options for
borrowers to get help.

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

Shuaib Hassan (13:37):
The problem with this whole industry and right
now is that I have servicersthat we work with.
They have people that areworking remotely.
They have added staff to handlethe call volume and that staff
is not well trained.
They don't understand themortgage market.
They don't understand thedirections of Fannie, Freddie
and so on.
So what actually happens is youcan request a forbearance plan

(14:02):
for up to six months.
And if you need anotherforbearance plan after that,
they can extend it to anadditional six months.
So you actually have a 12 monthtimeline for a forbearance plan.
Now, what happens at the end ofthe forbearance plan?
Obviously the idea is to reallyhelp borrowers who really need
help.
And so it could be that you askfor six months, but your job

(14:24):
comes back in two months orthree months.
So the idea is to help kind ofbridge borrowers to the point
where they get employment backup and they have income and so
on.
At the end of the forbearanceplan, each situation, each case
will be different.
So you might, for example startworking again in a couple of
weeks, someone that might be ona cruise ship is not going to be

(14:45):
working probably until 2021.
And all that matters because atthe end of the day, you still
owe that money to the investors.
You still owe that principle andinterest to the investors.
Now this whole thing was adisaster from the beginning
because of the media, really.
What we heard first fromborrowers was they thought this
was just a complete bailout.

(15:06):
Like I don't have to make mymortgage payments at all.
And it's just all good and done.
And I can live mortgage free inmy house for three months, six
months, whatever.
And that wasn't the case, but Ithink the media, the way they
spun it, the way they said it,the way people read a 120
character tweet and that's allthe information they have, they
were under that assumption.

(15:27):
What really happens is theFannie Mae, Freddie, Ginnie Mae,
all these organizations have setup pretty clear guidelines on
how to help borrowers.
At the end of your forbearanceplan, you fall into this area
called loss mitigation.
And loss mitigation is reallythere to help borrowers become

(15:47):
current.
Again, it's the idea thatpreventing foreclosures h as the
best thing for both the investorand the borrowers and the public
in general.
And loss mitigation programs arespecific to each investor.
So when I'm talking about lossmitigation, there are four
things that you c an do in aloss mitigation.
One is the most common thing,which is a modification, right?

(16:10):
And that was what we saw in2008, w here these massive
modifications t hat h elpborrowers forgive past amounts
of debt, basically lowerinterest rates because they had
original i nterest rates at 6%.
Now the market rates were 3%.
So that made it much moreaffordable.
So you will still have theoption to modify your loan at
the end of your forbearanceplan.

(16:32):
Should you meet the requirementsof, maybe in your case Fannie
Mae.
Fannie Mae will have their ownmodification guidelines, which
may be different than FHA, t hanFreddie 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 theend of your forbearance plan.

Kelley Lynch (16:51):
So how do you find out exactly which one?
I mean, because it is almostimpossible to talk to somebody
and to understand what'spossible.

Shuaib Hassan (17:00):
All these organizations, Fannie, Freddie
and so on, they have all ourguidelines and programs online.
So you can go see what theirloss mitigation options are.
And they will actually tell youthe criteria for each one.
So you can see which one fitsyour needs.
Again, it's very borrowerspecific.
It's case by case basisdepending on the nature of your
hardship, how long it will be,how much you might have in

(17:22):
savings.
You know, we deal withsituations where that, you know,
people could be going throughdivorces.
People could be going throughmedical emergencies, life
illnesses, things like that.
And so these programs are prettyflexible.
And then they, you have to tryto understand what that person's
specific situation is, see whichof these options best fits your

(17:43):
needs.
And the other thing you couldreally do is there is a lot of
good consumer advocate, Stateorganizations, and so on that
you can go and get help from.
So if you have questions, youcan always go to your local
housing authority and askquestions to them as well.

Kelley Lynch (18:06):
None of us really knows what's coming.
And I think that is part of whatmakes you think, okay, I've got
a little bit of money in thebank.
I might could pay my mortgagethis month, but then what
happens next month when I don'thave enough money for food?
People are weighing up thesekinds of things as well.

(18:26):
I mean, so how do you thinkabout balancing all of that?

Shuaib Hassan (18:30):
I think that the first thing that people should
understand is obviously healthand, you know, the immediate
essential needs are number one.
My advice would always be totake care of yourself first,
because there are programs tohelp borrowers and there's
programs that right now, forexample, there's a moratorium on
evictions and foreclosures.

(18:50):
So there's no company that isallowed to evict a borrower from
their home right now, orforeclose start initiate
foreclosure processes.
So, you know, that is kind of anessential thing, right?
To make sure that there's a roofon your head.
So knowing that I would say thentake care of your immediate
needs first.
If it's medical expenses, it'sessentials, especially if you

(19:11):
have no visibility into the nextmonth or the next two months, I
would be conservative aboutthat.
They'll be a lot of differentoptions for you to keep your
house.
And if it's more pressing needslike medical attention and
things like that, that can comeat a later date.

Kelley Lynch (19:28):
As a freelancer, I mean, there's a different
calculus in some ways, it's notso different than it's ever been
because you never know whenwork's going to come.
The difference is, I can'treally travel to do that work,
which is where most of it comes.
And so you could have a littlepiece of work come in.
Do you still just gauge it?

(19:48):
Like I'm going to take care ofme with whatever comes in and
I'm going to just put that stuffon hold for awhile just to make
sure I have enough money.

Shuaib Hassan (19:57):
Yeah, absolutely.
And I think the other advice Ihave to give to everyone is to
be honest and communicative withyour mortgage servicer lender.
I know they've had a bad rapsince the crisis, but they
honestly want to do what's bestfor borrowers.
And like I said before, everyoneunderstands that the borrower's
best interest and the investor'sbest interests are aligned.

(20:19):
Investors want borrowers to keepon paying and borrowers
obviously want to be in theirhomes.
Be honest with your mortgageservicer.
Call them and tell them what thesituation is.
When we talk to servicers, theysay the people who are the most
transparent and the more honestare the ones that we're more
willing to work with and theywill work with.

(20:41):
And again, one of the thingsthat people don't really
understand is the servicers arethere to help as a borrower.
They have no interest in youdefaulting on the loan.
Their job becomes increasinglyhard and difficult if a borrower
defaults, because now they haveto deal with the legal process
of foreclosure; they have tomaintain the property; they have

(21:01):
to do inspections and so on andso on.
They would rather you just makeyour payments and they get their
fee and lifestyle good.
And Fannie and Freddie and FHAand USDA, and all these
companies, they actuallyscorecard these servicers.
And one of the things they lookfor is how effective are they at

(21:22):
helping borrowers resolve theirbilling issues'?

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

Shuaib Hassan (21:44):
In 2007 when this happened, when the crisis
happened, none of the programsavailable were even a thought in
the industry before it happened.
They were reactive to thechallenges we saw at that time.
There was no mechanism formodifications or forbearances or
anything like that.

(22:04):
All that was a reaction to whathappened.
And right now we are facing achallenge that nobody knows
anything about.
No one knows how long this willlast.
No one knows what theconsequences are longterm for
from kind of an economicperspective, but also from just
a social perspective.
And my opinion is that, we havelearned from 2008 and what we

(22:30):
just saw in March with thefederal reserve, kind of
stepping into the equitiesmarket that people can write any
rules they want now.
And so we've come to thisenvironment where people will
take action and by people, Imean the government investors
and so on, and they'll takequick action now to reduce risk

(22:52):
for both the people as well asthemselves.
I think the problem we have isthat as a market, I cannot tell
who is truly affected and who isnot.
And whether the same benefitsshould be offered to everybody.
By that I mean, one of thebiggest things that we see is a

(23:15):
lot of the people that areasking for forbearances aren't
like Kelley.
They're actually pretty wealthypeople.
And what they've done over thepast few years is accumulated
Air BnB assets, for example.
They're asking for forbearancesbecause they over leveraged
themselves.
They bought 10 rentals.
Turned them into Airbnbs.

(23:37):
Things were great.
They have a lot of money in thebank.
Now, obviously the Airbnb marketis shut down.
They're asking forbearances andhelp.
Okay, should we help thosepeople versus should we help
really the people like Kelleywho actually had good intentions
and live within her means andhappened to be directly impacted
by this unfortunate situation?

(23:58):
So I think that's kind of thechallenge now is to figure out
how we can segregate the peoplethat were truly affected by this
versus the people who are tryingto take advantage of the system.
Because, you know, in 2008, alot of people took advantage of
the system as well.
So I think that's the challengereally now is figuring out how
we can get the most bang for ourbuck and really help the

(24:19):
borrowers who are true and trueneed who want the help and who
really need to help.
Growing up in Afghanistan, Inever ever dreamed of having a
six bedroom house, a fivebedroom house or anything like
that.
Having a roof over your headdoesn't mean having the best
house you can possibly buy orbeing in the best neighborhood.

(24:42):
It means you make sacrifices intimes like this.

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

Shuaib Hassan (24:58):
I honestly see a pretty scary future only because
we just don't know anythingabout this virus.
And we don't know if it's goingto last another six months in a
year.
We don't know what the impact ofit is from a health perspective
yet.
A lot of people are basicallylooking at death as the e nd

(25:20):
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 aboutth is v irus and what it can do
lo ng term t o people's healthand so on.

(25:42):
So I think it's scary in thatsense.
I think also 30 millionunemployed people is not
something to just overlook.
Thirty million people and theestimation might be up to 50
million people.
I think we have about 150,000maybe or so 150 million people
that are in the workforce.
You're talking about 25, 30, 35%of the workforce being

(26:05):
unemployed.
How long will they be unemployedfor?
And what does that mean?
The government has done a greatjob of acting quickly and
helping borrowers or helpingpeople.
The PPP program has been a goodthing.
The stimulus checks, you know, Iknow it's a small drop in the
bucket, but it's helped somepeople.

(26:27):
Unemployment insurance has beenstrengthened.
But how long can the governmentdo that for?
As an economist, there'sconsequences to everything.
So t he society still has to payfor this somehow.
Y ou k now, when the governmentprints three,$4 trillion of
money for a three month,bandaid, that has longterm

(26:49):
consequences to the country andpeople don't think about that.
So my fear is that put in, Ithink, I d on't know the latest,
but five or$6 trillion of help throughout corporate help and to
help with people for a three month bandaid.
What if this lasts the fall?
What if this lasts at the end ofthe year?

(27:09):
How much more help can thegovernment give to corporations
and people?
And you're kind of in a bindeither way.
If they do provide help, thatmight help things a little bit.
But again, there's longtermconsequences of that.
If they don't, then we arefalling into the great
depression again.
So no one knows what's going tohappen beyond July, August.

(27:31):
And that's the kind of scarypart to me is I don't know.
And I don't think these peoplewill get their jobs as fast as
they think that they will.
Even if they do, even if you start working Kelley, you know
it's going to be very p hased,right?
Y ou, it's not like you're goingto ramp up to a hundred percent
capacity quickly.
T here's going to be limitationsof travel for a long, long time.

(27:53):
So, you know, you may startworking locally again or going
to different States, but for youto travel internationally could
be well into 2021.
And the same way with hotels andrestaurants and things like
that, you know, 25% capacity.
And then maybe three monthslater at 50% capacity and so on.
So I think the future looksscary.
And I think that house prices,depending on the government

(28:15):
help, I think they will crash.
Um, probably about 12 to 18months would be my guest once
everything's kind of through thepipeline.
I do think that house priceswill kind of readjust to a level
that's a lot lower than it isnow.
We just don't know where thelongterm impacts are yet.

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

Shuaib Hassan (28:51):
Well, number one, during these kind of times, cash
is always King.
And I would tell people to havea majority of their assets in
cash.
Cash gives you an optionalitythat other investments don't.
Normally, I would tell people tokeep three to six months of
expenses on hand.

(29:11):
I w ould tell people to keep upto a year's of expenses on hand.
The second thing I would do ishave people assess their
spending habits right now.
I think during a contraction, weall kind of need to be better at
managing our finances.
Doctors, lawyers, people in mybusiness, we're all getting

(29:33):
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 hesays half of his staff were laid
off because elective surgerieswere stopped and so the
hospitals couldn't afford them.
I have lawyers, friends whohaven't billed anything because
the courthouses are closed.

(29:53):
People in my space lost theircommissions.
People have been asked to takesalary cuts.
I myself expect that if theworst happens, a lot of my
clients will go out of business.
And so I have to be cautiousabout that and say for an
extended period of time.
So my message would be, itdoesn't matter what you do,
don't think you're out of touchby this virus and the effects of

(30:16):
it.
Like I said, everyone that Iknow has been affected by it one
way or another.

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

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

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

Shuaib Hassan (30:41):
No, that was a danger in 2008, but because of
that, we put so much focus andregulation on the banks.
The banks are actually the onesthat are being asked to help
right now, which is kind offunny, right?
Because they were the ones thatkind of caused the 2008 crisis
that needed bailout.
But they are actually in one ofthe best financial positions of

(31:01):
all industries right now.
They're pretty strong.
They have a lot of cash, a lotof reserves.
And the federal reserve isbasically pretty much ensured
that banks will not run out ofmoney.

Kelley Lynch (31:12):
But 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 (31:19):
Our government isn't run any different than a
household, right?
So the printing money is addingto the debt that we have.
So just think about whathappened in your household.
If you're running up debtquickly and rapidly, at the same
time, you got 30 million peoplethat are unemployed.
So income taxes are going to godown.

(31:40):
Revenue generation from taxes,from sales taxes, business taxes
are going to go down.
Everything has been shut down,right?
So any household that incursdebt that yet reduces income,
that's not going to be a goodthing.
I don't know what the longtermeffects will be and how long
they can do this, but it'sbasically, it's as simple as
that.
As simple as any otherhousehold, you cannot carry

(32:01):
debt.
You cannot increase debt andlower income revenue generation
at the same time.

Kelley Lynch (32:07):
Going back to that idea of having three months, six
months, a year's there'sexpenses in hand again.
I think for those of us whocannot make that, who can't make
those three payments at onetime, we also don't have.

(32:30):
So what do people do?

Shuaib Hassan (32:34):
I think, you know, again, every situation is
different, right?
Whether you're by yourself oryou have a spouse, does your
spouse work?
You know, those kinds of things.
I think that the best thinganyone can do at this time, like
I said, is reassess your ownfinancial situation, including
your expenses.
Sure, you may not, you know,someone may not have a ton of
income and they could save, butdo they have do they have good

(32:57):
discipline in managing theirexpenses?
So really be honest withyourself with that.
My friends always joke because,you know, I do pretty well
financially now, but my friendlikes to call me a child of
immigration.
And he says, you'll still livelike an immigrant.
And you know, so my advice isbased on that, you know, for

(33:17):
example, I have no problemselling old things to raise
cash, to put in a bank.
I had a couple bikes a couple ofweeks ago, but I haven't used
for a long time.
I did sell them and I generatedfour or$500 and I put that in
the bank.
So little things like that, Ithink people, you have to be

(33:40):
resourceful right now, you know.
So first assess what you cankind of stop spending money on,
but look around you and see whatyou can do t o r aise s ome
cash.
Could it be maybe being adelivery driver for a while?
Could it be picking odd jobshere and there?
You know, grocery stores arehiring those kinds of things.

(34:03):
And again, I think it's thiswhole idea of that A mericans
don't like inconvenience and foragain, for child of immigrants,
when we did whatever we couldsurvive.

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

Shuaib Hassan (34:25):
So I was born and raised in Afghanistan.
I was born in 1979.
So the year that the SovietUnion invaded it's a good year
to be born.
So during the invasion, my dadactually left Afghanistan for
the US.
He happened to meet someAmerican backpackers in t he
early seventies, u m, collegestudents who he befriended.

(34:49):
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 herein Denver and he connected with
them and they helped h im getasylum and come here to study.
So he left in 1979 a nd mybrother and my mom and I were
there with our extended family.
And we lived there until 1990.

(35:11):
So the first 11 years I spentthere, obviously a majority of
that 11 years was during thehardest 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 inKandahar.
So in the South.
So it was it was a verychallenging time obviously, but

(35:34):
at the same time, it's probablyone of the f ondest memories I
have in all my life was all thetime I spent in Afghanistan.
Um, you know, it's interestingbecause we talk about this new
idea of new normal, and a lot ofpeople don't understand what
that means, but growing up inAfghanistan and during a war, I
tell you, by the time I was fiveor six, I didn't even know that

(35:57):
there was a war becauseeverything was normal to me.
It was normal to go to schooland make sure that you're
skipping away from the farmsthat have landmines.
It was normal to see tanksrolling by.
It was normal to hear the jetsflying over school and so on.
My school was bombed when I wasin, I think, nine, right before

(36:22):
we left.
The bomb landed right outside ofthe door that we were in, my
class was in.
And I mean, I saw my lifeflashing before my eyes like
shrapnel came and hit the tablethat was over me.
We all got under the table assoon as you hear the sound.
So luckily we h ad someprotection, but stuff like that,
you know?
And so, you know, for me, it wasalways a fun time obviously, c

(36:46):
ause y ou k now, all my familyand so on was there.
But it was also a verychallenging time because looking
back, I know what kind of dangerI was in a t that time.
I, as a kid had no idea whatpart of history I was living in.
So 1990 after about 10 years, 11years, my dad became a
naturalized citizen in the US.

(37:08):
He then petitioned for me a ndmy 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 they're going to pull out.
At that time, we gotcommunication from my dad that
he was going to become a UScitizen and we needed to get to

(37:28):
a US embassy for him to petitionfor us.
The only a US embassy that wasopen was in Karachi Pakistan.
So we, my brother and my mom andI, with the help of our family
and others, we literally, in themiddle of the night, they put us
under tarps and mattresses inthis old truck and we escaped

(37:49):
Khandahar to go to Pakistan andmade our way from, we first went
to a city called Quetta on thefar in the border of Pakistan.
Then we made our way to Karachi.
And then we made our way toIslamabad where the embassy was
and so on.
So that was a journey, a greattime, but through a lot of help

(38:09):
from people and so on, wefinally made it to the US
embassy and that's when my dadpetitioned for us to come here.
And so that was finalized, Ithink, in May of 1990.
And we immigrated to the US, toDenver and I've been here ever
since.

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

Shuaib Hassan (38:26):
I 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 inthe whole village and we would
always go there.
And the only show we could watchwas Full House.
And to me, I just always want itto be at a park.
And that was kind of my thing islike, you know, obviously in the

(38:49):
area I was in there, not a lotof grass and stuff like that,
but the idea of having a picnicin a park was the only thing I
could think of when I was on theairplane is"I can't wait to get
you just go in a park." Um, butyou know, it was exciting, but
it was also very, very, verysad, right?
Because Afghanistan, especiallyus there, we were a very
community based culture.

(39:11):
Uh, I mean, I lived in ahousehold with my grandparents,
my uncles, their wives, theirkids.
I think there were like 30 of usin the same household.
But to leave them was probablythe saddest thing, obviously.
To make matters worse for uswhen we first immigrated to US
it was my mom, my brother and I.
My brother is one year youngerthan me.
I was 11.
I think he was 10.

(39:33):
We had no English.
We didn't know any English.
My mom obviously didn't know anyEnglish.
She had no education.
And my dad left us literally, ashe brought us to the US.
We came to the US it was like amonth with him and then he left.
And so my brother and I, and mymom were in this country.
We don't know anybody else.
We don't know the language.

(39:55):
My mom doesn't even have a job.
It took a little while to getused to it, but it was anxiety
and exciting at the same time.
It was also very new, but youmissed the old.
It was just a very confusingstate, to be honest with you.

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

Shuaib Hassan (40:13):
You know, this is a very interesting question,
because a gain, t his comes frommy childhood, r ight?
And growing up in Afghanistanand being so poor and the
standard was always America,America, America.
A nd like everyone wanted to getto America.
And we would wait for months andmonths for my dad to send a pen

(40:34):
or a piece of paper fromAmerica.
And it was like the greatestthing ever.
But, you know, I could notunderstand why we were so poor
and why America was rich a s akid.
And I used to ask my mom and mygrandpa, that question and being
kind of a religious person, theyare, they would always tell me,
don't worry, God will provide.
That was their answer.

(40:55):
Or it's God's will.
And I used to be like, no, that's what did I do wrong?
Am I getting punished that Ilive in a poor country.
And so when I came to the US, Istarted obviously learning
English first and then I reallygot into, ki a stock investing

(41:17):
club in my school.
I didn't know much about it, butit was a way for me to kind of
learn English and hang out withkids.
And that really got me intotrying to understand the finance
side of things better.
But you know the question ofagain, why are some countries
poorer others or why am I livingin a society that's poor versus
America was always somethingthat was intriguing to me as a

(41:40):
kid.
And so I, when I got a chance togo to college, obviously, I knew
I wanted to study economicsbefore that, because I just
wanted, I was so curious as toknow what exactly makes a
country different than other, interms of t he economics.

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

Shuaib Hassan (42:04):
Yeah.
I mean, I think I, you know, Icame to a lot of different
conclusions and I think one ofthe things that I came up with
is the idea of people who areused to a certain environment
are only going to live up tothat environment.
In Afghanistan, there was noinspiration or aspirations to be

(42:25):
anything other than what youwere.
And it's cultural and religiousthat you're kind of told that
God will provide.
That is the most kind ofreligious answer I always get
from my family.
And I get no matter what thesituation is, if we don't have
food on the table and I'mworried about food for tomorrow
as a kid, my grandfather wouldsay, don't worry, God will

(42:48):
provide tomorrow.
And so for me coming to more ofa capitalistic society, I kind
of switched my mind to, I don'tneed to put my future in God's
hands.
I will take reins of it.

(43:08):
And so understanding that thesepeople in these countries like
the US, they live in acapitalistic society, which kind
of fosters that initiative, thatdrive, that want to do better
than your neighbor, that, youknow, keeping up with the
Joneses.
And to me, that's the great partof capitalism.
And I think that it's not bychance that most of the
developed and rich countries arecapitalistic societies.

(43:31):
So that's kind of my thinking asto what makes it different.
I think also obviously, thenatural resources you have are a
tremendous benefit.
And natural resources alongwith, to me, none of this would
happen without the education Ireceived.
Education really is key.

(43:51):
Minus if you're not United ArabEmirates or someone landing in a
bunch of oil, education is thebiggest factor in economic
progress.
So, you know, for me, thecapitalistic society and being
an educated, more educatedsociety are the two factors I
think, at least.

Kelley Lynch (44:13):
Does that, does that then mean that you've kind
of left behind that religiousside of life?
I mean, because as a personwho's from here, but goes to
countries like that all thetime.
That's the side of life that Ipersonally value very highly is
that, that trust and fait.

(44:35):
I mean, looking at you, you saidyour wife was Bangladeshi and
the idea of putting your faithand trust.
I mean, maybe that's what'shappened as a result of my job
actually, because I've, youknow, when you're freelance,
you're you feel like you, youare just kind of living out
there in God's hands somewherebecause the work comes, the work

(44:58):
goes and fortunately most of thetime the work has come instead
of gone.

Shuaib Hassan (45:05):
Yeah, no, and I, you know, I have a very
complicated relationship withreligion.
Um, you know, I like to say I'man 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 anenvironment where religion was

(45:29):
such a big factor in your life,there were obviously a lot of
good things about it in terms ofthe faith.
You're right.
Sometimes the poorest peoplehave the most faith in God.
And sometimes I think it's theonly hope they have.
But at the same time, I sawreligion being used in a very
negative way, right.
With the Taliban and whathappened with it and my family

(45:51):
is Shia.
So I don't know if you know muchabout Islam, but we're Shia and
obviously our family waspersecuted quite a bit by the
Taliban and so on.
And, you know, kind of growingup in that and seeing firsthand
the damage that religion causedto my country, I've been very
turned off by religion.
And maybe it's my nine year oldbrain still thinking about it,

(46:14):
and I haven't really processedit, but you know, the other
thing about religion, especiallyin Afghanistan, right, is that
the Quran is an Arabic.
We were taught in Farsi and I'veread the Koran since in English.
Now, looking back half thethings I was told, wasn't true.
And again, knowing that peoplecan use religion in different

(46:35):
ways and a lot of people usethem in negative ways.
It just made me lose faith inkind of religion and not just
this long, but just reallyreligion in general, because I
think you all know that ithappens in all religions.
There re times, like you said,like, Oh God, please let this
happen.
Or please make this go away andstuff like that.
Um, but looking from a verypractical perspective, I just

(46:58):
have a lot of bad tastes, butreligion and God.
And one of the other stories wasthat when we came to the US, we
were sponsored by a Catholicchurch and that's how we usually
immigrants getting sponsored.
And so this church was going toprovide us with the couches and
clothes and so on to kind ofhelp us acclimate to the new

(47:20):
culture.
But one of them asked us toconvert and I said, no, we're
Muslim.
And she said, the reason thatyou were so poor was because of
the belief, your belief in yourGod convert and you will live
the life that we live.

(47:40):
And that really, really annoyedme.
And I just, we did not take onebit of help from that church
after that.
We just left and t hen neverwent back to that church again.
But stuff like that throughoutmy life has kind of made me have
a really bad taste i n religion,you know?

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

Shuaib Hassan (48:20):
It's going to be inconvenient.
And that's the only way I canput it.
It's going to be inconvenientand Americans don't like
inconvenience as we can see bythe protests and things like
that for basic orders to havesome safety and health, but it's
going to be inconvenient.
I think we're going to live in asociety where we are going to be
wearing masks for awhile.

(48:41):
There's going to be socialdistancing.
There is going to be limitednumber of people at the malls or
the stores or those kinds ofthings.
I think also, like I saidearlier, i t i s going to be
inconvenient for people from aneconomic perspective.
I think just like the greatdepression a nd people, you
know, there are stories of thegreat depression and how people

(49:01):
were s ociable at that time.
I think that i s a n ew normalfor people.
Like I said, I think there'sgoing to be a lot of people that
need to downsize.
I think there's a lot of peoplethat really need to become
humble and take the j ob that Ican get rather than the job they
really want, u nderstanding thatthis is all temporary, but I
think that that's how we have tolive.

(49:21):
And it's going to beinconvenient to not get on a
cruise for the next year orsomething like that, but it's
going to be the new normal.
And I think people need to kindof accept that and really
believe that that's what's goingto happen.

Cindy Sealls (49:35):
Are we bound to adhere to the principles of
capitalism as we know themtoday?
Or could this pandemic force usor allow us to modify or adapt

(49:56):
capitalism in a different waythat works better for most
people?

Shuaib Hassan (50:04):
Yeah, I think that's a great question.
I think that what we've seenover the last three, four months
with corporations and what'sgoing on with people, it's not
capitalism.
Bailouts are not capitalism.
Government help, by nature isnot capitalism.
The whole idea of capitalism isthe strong survive.
The weak ones don't.
Other ones will come and taketheir place and so on and so on.

(50:27):
What the fed has done really hasbeen socializing the corporate
world.
And, I think a lot of peoplehope, and I certainly hope that
that movement goes towards thegeneral population, not just the
corporations.
But really that's what you'reseeing is the corporate world
has become socialized.
When you have companies likeCarnival Cruise lines, who first

(50:49):
of all, was a big problem inthis pandemic.
They have shut down all theircruises.
They're docked somewhere.
I don't know, even know wherethey'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 goingup every day.
So to me, that's going a littletoo far, and I think that kind

(51:12):
of wave of capitalisticsocialism's already kind of come
about.
And I think it's a matter oftime before really the people
asked for it from a socialperspective.
You know, Bernie was probablyahead of his time a little bit,
but not by much.
Um, you know, it seems like alot of people seem to be okay
with the idea of bailing out ofthese companies, but not

(51:33):
universal healthcare during apandemic, which is absolutely
crazy to me.
So I think that, you know, a lotof the hoping that some of the
changes that will happen here ispeople really understand what
the word essential means.
They have a term for essentialbusiness, but they don't have a
term for essential socialismwhen it matters to healthcare.

(51:53):
For example, our health isessential, not the airlines, not
the cruises, not the hotels.
If anything, this kind ofpandemic highlighted is the lack
of healthcare in this country.
The fact that there's people areuninsured during a pandemic and
the United States has absolutelycrazy.

(52:14):
I probably, you know, would havenever guessed that I would have
to worry about my health in theU S when I left Afghanistan, but
that's where we are now.
So, I think that's a matter oftime before people really demand
that from our government.
We talked about this idea ofhelping borrowers as well during
this pandemic, that is somethingthat I have a different

(52:35):
perspective from then kind ofmost socialistic kind of
thought.
I believe that everyone has aright to a roof.
I don't think that the roof hasto be the same for everyone.
I don't think everyone has tohave a six bedroom house in the
best neighborhood or those kindsof things.
And I think that people arebasically expecting that they

(52:59):
have the right to have thebiggest house there is and if
they come to a tough time andstuff like that, then help me.
I don't believe in that from aneconomic perspective, but also
again, from kind of growing upin Afghanistan, and knowing that
you can do without this giganticseven bedroom house.
That's not really essential.
That the money could go toeducation.
The money you could go tohealthcare- those are the

(53:20):
things.
So, I honestly hope that morepeople kind of realize that they
need to live within their means.
And I think that, you know, theidea of a three month formal
savings plan really went out ofVogue in the last 10, 15 years.
Um, obviously it was pretty bigafter the great depression.

(53:41):
And obviously a lot of thosekids who were born in the
fifties and sixties, I hadparents who lived through that
nightmare.
It was instilled in theirbrains.
They understood it growing up inAfghanistan.
I understood the importance ofit.
Um, I understood the importanceof there is no government help
for you.
But I think now, because peopleexpect as government health,

(54:02):
they're not taking personalresponsibility for their own
kind of financial position.
And I understand that somepeople do live paycheck to
paycheck and they can't, theycan't save up, but I'm not
saying save up three months ofexpenses over the course of
three months or six months.
If it's a year, if it's twoyears, if it's three years, when
I first started my job out ofcollege, it took me about two
and a half years to come up withmaybe two months of my rainy day

(54:25):
fund.
But I made it happen.
You know, I saved, I try not tospend.
The most important thing for mewas to come up with a couple of
months of savings just in caseanything happened.
So, I'm hoping that people willrealize that they can't just
rely on the government for help,especially during these kinds of
times.

Kelley Lynch (54:44):
Just looking at what has happened in your
country perhaps it's a verycynical way to look at it.
But part of me says, there'ssomething to do with this system
that we live under that hasallowed that to happen.
This capitalist system that isabout corporations, specifically

(55:07):
big defense contractors andother people making a lot of
money that has been part of whathas allowed that conflict to
drag on and on.
Does that ever figure into yourthoughts about this system and
about living in America andabout what might be able to

(55:27):
happen, sort of a new normal?

Shuaib Hassan (55:30):
The whole idea of capitalism is what made America
great and what makes America sogreat, right?
I think that the problem with itis that we're much more of kind
of a global world.
And I think that a lot moreAmericans are now more better
traveled.
They understand the world betterand, you know, they deservedly
want certain rights that, youknow, other countries have, you

(55:55):
know, free healthcare, universalhealthcare rights education, and
those kinds of things.
I don't wish for capitalism togo away or to be reduced or
watered down.
I'm a true capitalistic guy.
And, you know, Warren buffet hasone of the famous quotes is he's
a card carrying capitalist.
And he actually has a card thathe carries in his pocket every

(56:15):
single day.
But Warren also has contributed99% of his money to charity.
He lives in the same house hebought in 1950 in Omaha,
Nebraska.
He drives an old Lincoln.
Goes to McDonald's every day.
So, you know, I think that theproblem with this has become the
people who want more of asocialist environment, they are

(56:38):
trying to make the other side,the capitalistic side,
completely evil, and thecapitalist wants to make the
socialism completely evil.
And I think there's a middleground that really needs to be
discussed and really focused on.
But that's been kind of adialogue over the last God knows
how long, is socialists andcapitalists are bad.
Capitalists think, you know,socialists are terrible people

(56:58):
and they're the worst and so on.
I think that corporations can dotheir part by being more
socially responsible.
By mandating paid time off fortheir employees, providing more
healthcare options, things likethat.
But I think the government hasto lead the way.
If you leave it up to thecompanies, they're not going to.

(57:21):
I mean, their main job is tomake money for their
shareholders, but the governmenthas to lead the way, one by
doing it themselves and two, byincentivizing them.
You can either incentivize themor you can punish them.
So you c an either raisecorporate taxes or make i t a
way where you are incentivizingthem by giving them tax benefits
and things like that.

(57:41):
But I think the government hasto lead the way in terms of
making corporations b e moresocially responsible.

Kelley Lynch (57:48):
And in an environment like what we find
today is that realistic or arepossible?

Shuaib Hassan (57:56):
It's possible.
I think, you know, bottom lineis I think that the government,
again, they're the leadingforce.
I mean, they are, you know,people look at Amazon or
Microsoft to take care of theiremployees.
Well, that's really notMicrosoft or Amazon's job to
take care of their employees interms of the basic needs human
needs.
That's the government's job.
Sure, Microsoft has to, andAmazon has to pay their people

(58:18):
well; have a good safeenvironment and so on.
But you don't know if you'regoing to work at Microsoft next
week or tomorrow or whateverelse.
For me, it's scary because Ihave two little kids and knowing
that my healthcare for my familyis dependent on my job, it's
scary.
And that shouldn't be my companyjob, because again, tomorrow

(58:41):
they could let me go because ofthis covert environment.
And it's no fault of me or them.
A lot of good companies aregonna shut down.
A lot of good people are gonnalose their jobs.
They're not going to havehealthcare.
That's not corporateresponsibility.
That's the government'sresponsibility.

Kelley Lynch (59:04):
We have been sold a vision of this American dream.
That is a bigger car, a biggerhouse and, and it's material
goods.
That word enough, just doesn'tfigure into that.

Shuaib Hassan (59:16):
No, unfortunately, obviously the
government kind of encouragesthat, too.
If you look at the economy, 70%of the GDP is consumer spending.
That's one of the reasons why Ithink the government will have
every incentive to make surethat borrowers, people are
getting cheap money, cheapaccess to money, keep raising

(59:37):
their debts.
The consumer is such a big partof the US GDP and that's a huge
force.
And that we're all dependent onbuying the newest ipad or the
newest iPhone or upgrading tothe newest truck, or constantly
moving up to a new house oreverything else that comes along
with t hat, you know.

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

Shuaib Hassan (01:00:06):
No 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 asrelative to the GDP.
And especially if you look atincome with a certain groups,
right?
The ga p s t ill w idens.
We've n ot narrowed the gapbetween the poor and the middle

(01:00:30):
class, really.
And so it would work fine ifmoney was being flown downstream
and everyone's incomes arerising and people kept on
spending it and incomes aregoing up, people are spending it
we ll, we don't have thatproblem.
We have a debt problem.
People ar en't m aking thatmoney, but they're taking on the

(01:00:50):
debt and the debt is what'skeeping the American dream
alive.
And you know, so it's t hatcycle, I think, of debt that's
the problem, not capitalism byitself.

Cindy Sealls (01:01:03):
I think we can learn a lot from, from your
story, you know, about beingthankful for what we do have and
realizing that we could probablylive on a lot less.
We'd be fine.

Kelley Lynch (01:01:36):
Things change fast these days.
It had been about a month sinceour call was Shuaib and I wanted
to call back and talk to himabout what's going on at the
moment.
So Shuaib, it's great to see youagain.
I wanted to call and catch upwith you because I know the

(01:01:58):
moratoriums on evictions andforeclosures are ending in just
in a few days.
And I know we don't know exactlywhat's going to happen at this
point, but I wanted to kind ofget a sense from you of what's
actually possible at this point,or what's workable for our

(01:02:23):
economy going forward.
And what are the consequences ofthe choices that are being made
at the moment?

Shuaib Hassan (01:02:32):
Yeah, that's a good question.
And I think a lot of what isbeing discussed right now is
focusing on getting money to thepocket of the unemployed people.
We're not really seeing a lot ofdiscussion on what's going to
happen with these evictions andmoratoriums.
The thinking is if they aregoing to get money in the hands

(01:02:58):
of these people, then they canmake their rent payments and so
on.
When you break it down, there'sthe couple options we have
obviously is one, do nothing;two, come up with a new stimulus
bill, which they're working onright now.
And then, you know, finally dosome kind of hybrid where you
are doing a stimulus package,but you're not taking it to the

(01:03:19):
extreme they did last time.
The problem with last time wasthat they are incentivizing
people not to work in certaincases because unemployment
benefits were so good that theywere getting more money from
unemployment and they were fromtheir jobs.
We do nothing, what we're goingto see is a wave of evictions.

(01:03:40):
I read an article today that athird of renters are not
confident that they will maketheir August payment.
And that's a huge concern,obviously.
And if you look at the economyand where the unemployment came
from, it was at the level of thekind of lower income bracket,
the people that were working atrestaurants, hotels, you know,

(01:04:02):
places like that.
They're mainly renters.
They're not homeowners.
And what I'm seeing in myindustry forbearance requests
are actually going down.
And what we see is the peoplethat requested it forbearance on
their mortgages, only 60, 65% ofthem are actually taking a
forbearance.

(01:04:23):
The other ones just requested itas a precaution, but are
actually making their payments.
So the unemployment picturehasn't really hit that upper
income bracket yet the ones thatare homeowners and so on.
So what's going to happen isyou're going to see this massive
homelessness among renters.
And there is a good chance,obviously, that these

(01:04:44):
moratoriums will get extended.
And I think they will.
Now the moratoriums, there's twotiers to the moratoriums.
There was a national moratorium,but also state and County
regulators can implement theirown moratoriums.
So I think even if you don't seesome kind of a moratorium in the
next bill, I think because it's,especially because it's an

(01:05:05):
election year, you will see itat the state and local level
where, you know, counties and soon will prohibit evictions of
renters due to covert reasons.
So the picture really is notclear right now.
And it's obviously, there's alot of anxiety, not only from
just the renters and people thatlive in these areas, but also

(01:05:26):
the landlords, right?
They are still obligated to makepayments.
They borrow money to fund theseapartment buildings and these
other multifamily residentialareas.
They still have to make theirpayments.
So even if there's moratoriumsin place and we protect the
people that are living in theseunits, we still might have a

(01:05:47):
bigger problem with landlordsdefaulting.
That could cause a differentconsequence where now you've got
properties that might not bekept up in terms of maintenance
and things like that.
There might be rent increasesactually.
So again, if you think about theeconomics of things, if I have

(01:06:08):
60% of my tenants paying, but Ineed to make an obligation that
requires me to have 90%occupancy, the only way I can do
that is increase the rent on thepeople that are paying.
So, there's a lot of differentconsequences of this, and I'm
not sure which one's going tohappen, but at the end of the
day, there's not a good solutionthat meets the needs of the

(01:06:31):
various stakeholders, therenters, the landlords, the
banks that own these mortgages,these commercial mortgages.
A lot of these banks, the biggerbanks reported earnings last
week.
And by law, they have to put into reserve certain amount of
money for loss provisions thatthey think they'll get because

(01:06:52):
of these loans they have.
Every major bank increased theirloan provisions for the second
and third or third and fourthquarter.
So the banks are thinking thepicture's going to get worse.
The banks are thinking thatthey're going to have some
really bad loans coming up andthey need to save money for it.
So overall, I think that thegeneral population will be taken

(01:07:12):
care of through moratoriums, butI think there's going to be a
bigger impact to the economybecause of the loans going bad,
or these mortgages are not beingable to be paid by the
commercial owners of theseunits.

Kelley Lynch (01:07:27):
So what does that look like then when you think
about knock on effects and otherthings?

Shuaib Hassan (01:07:32):
They could be bailed out by the government,
right?
So they could go get pretty lowinterest rate loans from the fed
and be able to make theirobligations, sort of like the
PPP program, right?
There could be a PPP program forthese commercial owners of real
estate.
That's one thing.
They could also obviouslyincrease the amount of money

(01:07:56):
that unemployed people aregetting.
And either one of thosebasically ends up in us printing
more money.
I think one of the things thatthe lawmakers basically did with
the first stimulus, it's like mybrother says, when you get a
patient in the ER, the firstthing you do is stop the
bleeding.
You don't diagnose the problemat that point.
You're not trying to figure outwhat happened or how to fix the

(01:08:18):
issue.
You're just trying to stop thebleeding.
When the stock market went down40% in March and the
unemployment numbers came outand then it was 10 million,
7,000, 000 a week.
All they could do was just tostop the bleeding by just
flooding the economy with money.
They didn't think about all theeffects of what that will do.

(01:08:40):
They didn't think about COVIDand how long it might last and y
ou k now, how long c an theycarry this; things like that?
All they did was stop thebleeding.
And now I think w e're t o thepoint where the bleeding has
stopped to a point.
And now we have to try tointelligently figure out how to
diagnose the problem and find asolution to i t.

(01:09:09):
And the issue with this is thatnobody knows the path of COVID
and that's kind of causing thebig problem for economist and
everyone else is, you know, howlong can they continue to put a
bandaid on the economy?
How long can they continue toput money into the pockets of
people?
Is it three months?

(01:09:29):
Is it six months?
You know, everyone is thinkingmaybe by the beginning of next
year, we have some kind ofvaccine.
That's if all things go good.
Even then it's going to takeyears 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 beback to normal and we're done

(01:09:50):
with this.
So what I think for us ingeneral, for the next several
years, is we are going to facein an environment where there's
been so much money, that'spushed into the economy that
it's going to cause inflation.
And so you're going to possiblyget something like the

(01:10:11):
depression, where people will beunemployed.
Incomes will be lost.
And at the same time, you willhave a higher, expense of
living.
We see house prices continuingto rise, right?
Rates are so low housingdemands, great supplies, low
housing is costing more.
When there's inflation theordinary stuff that you could

(01:10:33):
spend money on food, gas, thingslike that.
They all increase as well.
And the fed printing money isjust going to cause that problem
to be even worse.
And so for kind of, for methinking about it in the next
three, five years, we're goingto have this kind of
inflationary environment withlow economic growth, which has

(01:10:55):
any economists worst dream.

Kelley Lynch (01:10:57):
It's a total nightmare.
So what does an average persondo to navigate a situation like
this?

Shuaib Hassan (01:11:05):
Well, it's scary.
I mean, the first thingobviously is to save as much
money as possible, right?
Um, you know, cut spendingthat's not necessary.
Be smart and prudent with yourfinances.
And honestly you have to raisemoney and raising money doesn't
mean necessarily cash.
If you look at what thecompanies are doing in the

(01:11:27):
corporate world, they're raisinga lot of debt because debt is
cheap and they are saying, weneed to have these credit lines
just in case this pandemic goeslonger or we need more money.
And so, you know, my advice to alot of my friends are in this
situation is to one, obviouslybe prudent with finances that

(01:11:48):
you have.
Second, go get a line of credit.
Go get a credit card.
Go open up a couple of creditcards because you might need
that.
And for the average person, Ithink that you have to kind of
work the way a corporation doesin these environments.
And every corporation isbasically trying to raise enough
money to weather, the unknown.

(01:12:10):
I hope that you never use thatcredit card, but you need to
have it just in case.
Because as Mark Twain said, abanker is a fellow who lends you
the money when you don't need itand takes it away when you do.
It's much harder to have acredit card when you're, when
you've lost your job.
It's much harder to have acredit card when you've
defaulted on a couple of loansalready.

(01:12:30):
So do that kind of stuff now sothat you don't have to do it
later.
I'm personally doing thatmyself, you know.
So I have a line of credit to mymortgage company.
I've opened up a couple ofcredit 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 safetynet, because there are a lot of
unknown for the next two, three,five years.

Kelley Lynch (01:12:51):
So let's say worst case scenario, you end up
needing to use all of that.
Or maybe you've already got debtand you're adding, you're adding
and you end up under this pileof debt.
I read some economists talkingabout in certain societies, they

(01:13:11):
used to have like a debt.
It was like a wiping clear ofthe debts.
And they just sort of said,right, that's the end we're
finished.
And then we wipe the slate cleanand everybody starts again.
What happens if we've all builtup so much debt and there's this

(01:13:32):
inflation and basically thewheels kind of come off the car
as it were.
I mean, is it kind of likeeverybody goes into bankruptcy
or what happens in that case?

Shuaib Hassan (01:13:42):
Pretty much what I'm saying is not to go open up
a credit card and go take avacation or go buy an RV or
anything like that.
But I'm saying is when it comesto a situation where it's
depression era, either yourfamily is outside in the
streets, or you can use this tomake your minimum payments on

(01:14:02):
food and shelter and things likethat.
So it's not trying to say youshould be irresponsible and go
do that.
It's saying that for the worstcase scenario, I'd rather have
debt and I'd rather file forbankruptcy than have my kids and
my family on the streets or themstarving for food.
But that's basically the optionat the end of it is.

(01:14:23):
If you do all these things andyou are hoping when you have
good, intense to pay it back atsome point when things get
better, if it doesn't then yeah,bankruptcy is an option or
again, you know, I hate to putthe corporate world in this
perspective, but companies do itall the time, right?
They file for bankruptcy all thetime.
And back in 2007, 2008, a lot ofpeople did file for bankruptcy

(01:14:46):
and sure your credit is damagedfor the next seven years.
But seven years is a smallamount of time in the grand
scheme of things.
And again, we're talking aboutonly in situations where, like I
said, like, again, you don'tknow how to feed your kids.
I'm not condoning this behavioror saying, Hey, you should be
responsible.
Just go rack up a bunch of debtand then file for bankruptcy.

(01:15:08):
No, no, not at all.
You should have every goodintention, but you should, you
should prepare for somethinglike that.
Right?

Kelley Lynch (01:15:13):
No, that makes sense.
If we just push that thoughtexperiment just a little bit
further, what happens to theeconomy if a lot of people file
for bankruptcy or a lot, youknow, 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 eventwo, three years down the road

(01:15:34):
can't repay?
And this is debt that has justcome from, from people trying to
live through COVID.

Shuaib Hassan (01:15:43):
It'll be the same thing that happened 2007, 2008,
2007, 2008 was a dead issue.
People are over leveraged mainlyin their houses, but they also
use our houses as ATM for otherthings.
Um, but yeah.
So where are you going to see isobviously the banks will be in
trouble.
You will see unemploymentbecause you know, it has a knock

(01:16:03):
on effect of companies that needmoney from these banks to keep
people employed, to makepayrolls or to invest in new
technologies or to invest in newgrowth ideas.
They're not going to have themoney from the banks because the
banks are having to cover thelosses of these bad loans.
So there will be an impact tothe economy.
To what extent, I don't know.

(01:16:24):
And that depends on how manypeople default and so on.
Also depends on how prudent thebanks are being in terms of
their own reserves.
Now, I'm not sure if you needus, but the fed requires banks
to run these things calledstress tests.
And they just actually ran themlast quarter.
And basically the fed will dothese extreme scenarios.

(01:16:46):
What if unemployment's 30%?
What if your losses are 35%?
What if this happens?
And they basically say, do youhave enough money in reserves?
Not just money overall, but justmoney in reserves to cover these
scenarios.
I think only one bank failed andit was Wells Fargo.
Every other bank passed thattest.
So I think most banks are inpretty good shape.
And they've learned from 2007,2008.

(01:17:08):
And I think the regulatorslearned from 2007, 2008.
So I actually think that we'llbe in a lot better position than
we were back then because ofwhat we learned and because they
accept being prudent and they'rebeing forced to be prudent and
they are being put under veryextreme stress scenarios to make
sure that they can weather thestorm.

Kelley Lynch (01:17:38):
So 2007-8, the car was really wobbling.
I mean, the axle looked like itwas broken.
The wheels were starting to comeoff.
Um, we barely put them back onwith some tape and some glue and
whatever else.
And so then we kind of go downthe road a little bit further,
and now it's like, it feelslike, I mean, nobody saw this

(01:18:00):
coming and the banks, you know,you said were doing good.
And, and now, now it reallylooks like the wheels are gonna,
you know, now it looks likereally the wheels are gonna come
off the car potentially.
So we talked about capitalismlast time and you were all for

(01:18:21):
capitalism and I'm not sayingthat capitalism is the cause or
the thing, but is theresomething that is structural
something that is, I mean, andthis might be a conversation for
a much longer time, butsomething that is kind of like a
way that we are, I don't know,structurally this somehow

(01:18:42):
there's something that is justfundamentally kind of broken or
something that we need to changeabout the way we do things.

Shuaib Hassan (01:18:52):
Yeah, absolutely.
I mean, I think, you know, I amall for capitalism, but I'm also
very cautious of what societyneeds in general.
Um, if you look at this, one ofthe biggest issues obviously is
this is a healthcare epidemicand the nation from a healthcare
perspective is not where adeveloped countries should be.

(01:19:16):
I'm all for healthcare for all.
Even though I'm a capitalistthat has nothing to do with
capitalism.
That's just being part of asociety.
Um, so I think structurally,when we think of it, healthcare
has to be number one.
This is a health pandemic, andit's basically shown the flaws

(01:19:37):
of our system.
So, you know, even when we'rethinking about this vaccine,
there's still a lot of unknownsabout the cost of this vaccine.
Can uninsured people get thevaccine?
That's a huge question that weshouldn't have to as a developed
country, as one of thewealthiest nations have to worry
about.

(01:19:57):
So, from a structuralperspective, I think healthcare
is one, obviously education isanother.
But with so much mistruth byCOVID is so many conspiracy
theories and things like that, Ithink, this is just personal
opinion, it's not fact, I thinkit just shows how uneducated
Americans are.
It does.
So a few of these things Ithink, need to be addressed from

(01:20:19):
a structural perspective.
And I think that the politicalsituation, obviously as well,
you know, I think that thiscountry with this two party
system, it is designed to dividepeople.
It is designed to have this usversus them mentality.
When you look at some of theEuropean nations and you look at
Asian countries, you know,Vietnam has basically zero cases

(01:20:41):
of Covid.
Zimbabwe has better Covidnumbers than we do.
Those nations have always had akind of we're all in this
society together mentality.
And we don't, and you know, noone wants to wear a mask because
they can't breathe in it, orit's uncomfortable.
Where the conversation shouldbe.

(01:21:02):
I'm wearing a mask because I'mworried about my neighbor's
health.
Somehow wearing a mask hasbecome a political statement
rather than a healthcare issueand a wellbeing issue of your
fellow citizens.

Kelley Lynch (01:21:15):
That's right.
Thank you so much for your time.

Shuaib Hassan (01:21:20):
Thank you.

Kelley Lynch (01:21:32):
Today, it's still just us.
We did the episode.
Tanvir's asleep on the otherside of the world, and we're
recording this as usual, thesedays kind of at the last minute.
So I want to go back to thatconversation that we were having

(01:21:53):
at the beginning.
What I like is this other partof the definition.
Moral hazard arises when boththe parties have incomplete
information about the other.

Cindy Sealls (01:22:07):
That's interesting.

Kelley Lynch (01:22:09):
I think that is interesting.

Cindy Sealls (01:22:10):
Yeah, because let me tell you something.
If the insurance companies areworried about smokers in bed,
they need to go up against thedaggone on tobacco industry.
Cause that's, what's causing thesmoking in bed.
They're getting people hooked oncigarettes.
So I want to smoke everywhere,not just in the bed.
I smoked when I got up in themorning, I smoked as I was
driving to work.
I smoke at work.

(01:22:31):
I smoked at lunch.
I smoked at dinner.
I smoked while I was watchingTV.
I smoked when I was in thebathroom, getting ready for bed.
And then I smoked in the bed.
So yeah, they have incompleteinformation about why a smoker
smokes in the bed.

Kelley Lynch (01:22:46):
So what about the, what do you think then about
this situation?

Cindy Sealls (01:22:51):
I think they're crazy.
I'm not going to work less it'slife or death.
I'm not going in to work.

Kelley Lynch (01:23:03):
And so what's going to happen with all of
this, I suppose, is that youare, you are kicked out of your
house because you refuse toaccept the risk of going into
work.

Cindy Sealls (01:23:19):
Listen, 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.

Speaker 6 (01:23:39):
So 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
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See you next week.