8 August 2018 FT — Articles to Read

8 August 2018


Question: According to MSN:Money, what are 10 reasons people aren’t buying houses?


Japan medical school admits favouring men – Pg. 3

–        A prestigious Japanese medical school has confessed to systematically rigging its entrance exams against women in a scandal that has highlighted the nation’s deep problem with gender discrimination

–        …more than a decade subtracted marks from female applicants in a deliberate effort to produce more male doctors, and falsified exams to help specific individuals

–        They show an ingrained culture of sexism in Japan, which is stuck at 114 out of 144 on the World Economic Forum’s rankings of gender inequality…

–        The manipulation at Tokyo Medical University came to light only after prosecutors began a corruption investigation against the school’s officials for allegedly admitting the son of a bureaucrat in return for government grants to the university

–        For the crucial essay section of this year’s entrance exam, the university first subtracted 20% from all marks.  Then it gave 20 bonus marks to men who had taken the exam three times or less.  So if a woman and a man had both scored 70 out of 100, the woman was given a score of 56 while the man was given a score of 76

–        The proportion of women admitted to Japanese medical schools rose steadily until 2003 when it peaked at 33.8% and has remained broadly stable

–        Whereas Japanese women have a higher pass rate on entrance exams for almost every other university subject, including physics and engineering, in medicine the pass rate is 6.85% for men and 5.91% for women

–        People connected to Tokyo Medical University told local media the reason the exams were rigged was that women were more likely to quit the profession when they had children


Financial Services – Pg. 7

–        Higher expectations are not the only problem the insurers are facing.  IN many parts of the world, their core markets are mature, competitive and barely growing at all.  And since the financial crisis they have had to grapple with low interest rates and new capital rules, both of which have dented their traditional business models

–        Technology has made it easier for insurance companies to monitor what their customers are doing

–        Reinsurance companies, which help traditional insurers to reduce their own risks, are also getting into the act.  Their business model has involved taking on risks in return for a premium, much as any insurer would


Answer: (1) Interest rates are on the rise (Prof Note: Every 1bp rise on a 30-year loan costs the borrower $1,000.  So, a 100bp increase cost the borrower $100,000 over 30 years); (2) Student credit scores are feeling the pressure (Prof Note: Average student debt is $37,000); (3) People are looking to avoid any additional risk (Prof Note: Houses need to get back to forced savings vehicles.  HELOCs need to be more regulated); (4) Millennials are opting for a new lifestyle (Prof Note: I talk to a LOT of millennials.  They are not “opting” they are being pushed.  Who does not want a house?!); (5) A 20% down payment is hard to come by (Prof Note: Do the hustle, i.e. the side hustle and save!); (6) Supply is low; (7) Houses aren’t being built; (8) Renting is more attractive (Prof Note: The millennials did teach me something in Baltimore.  It is not $/sf that is the important metric but rather $/bedroom.  Millennials will sleep in spaces smaller than my closets!); (9) Baby boomers aren’t selling; (10) People live in fear of another crisis (Prof Note: My prediction: 15 months!)