In particular, the real appreciation channel seems to have been operating very slowly, and inflated animal spirits seems to have put in question the existence of the fully rational inter-temporal optimisers taken as given in many models. In addition, the public sector itself may also have been affected by exuberant expectations.
In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace.