On November 11 FTX filed Chapter 11. Within a day the commentary settled on its favorite conclusion: the gamblers were idiots. Millions of young people shovel their savings into tokens, options and parlays. The serious people shake their heads. Financial illiteracy, they say. Someone should teach these kids about compound interest.
Financial illiteracy is the wrong diagnosis. Run the compound interest lesson on the official numbers.
- Median gross salary in Spain: 20.920€ (INE, Encuesta de Estructura Salarial). The modal salary, the one most people earn, sits far below that.
- Used housing in January 2023: 3.929€/m2 in Madrid, 4.050€/m2 in Barcelona (idealista index).
- A modest 90m2 flat: ~355.000€. The deposit is 71.000€, plus another ~10% in ITP and notary costs.
- Net income ~17.300€. Save 20% of it, a heroic rate, and you bank ~3.460€ a year.
Twenty-three years to the deposit, alone, and only if prices politely freeze while you save. They will not. They rose 5,4% last year. Two earners halve it to a mere decade of discipline for the entry ticket.
The compound interest lesson teaches the opposite of what the serious people intended. The savings account is the one bet guaranteed to lose.
The ladder that was
The postwar deal had a shape. Work, save, buy a home, let the home carry your retirement. Boring, deterministic, and it worked for roughly one generation. That generation writes the op-eds about prudence now. The Banco de España household finance survey draws the picture by cohort. Each generation of Spaniards under 35 owns less home and less wealth at the same age than the one before. The ladder did not wear out. It was sold.
A lottery ticket is irrational when the ladder works. When the ladder is gone, the math flips. A deterministic path to nothing loses to a 2% chance at something.
The kids did the math.
Crypto, meme stocks, 0DTE options, sports betting apps: four skins on the same instrument. Variance is the only asset class the young can afford.
The house always knew
The state ran this business first. The modern lottery is Genoese. Citizens bet on which five of ninety candidates the city would draw for the council. Your abuela plays a 5-of-90 game five centuries later. Spain's own Lotería Nacional came out of a war treasury emergency. The Cortes de Cádiz approved it in November 1811 and the first draw ran in March 1812. A state under Napoleonic siege invented a voluntary tax on hope. The pitch has not changed since. The state knows the ladder does not reach. So it sells tickets to the roof, and El Gordo becomes national liturgy.
Our decade privatized the franchise and added a feed. Robinhood confetti. Exchange affiliates. Gambling logos went on football shirts. The pitch worked. The state killed it by decree: Real Decreto 958/2020 banned bookmaker shirt sponsorship outright. Most of professional football had already signed one. An attention economy now wraps a variance economy, and it extracts from the demographic the housing market already priced out. FTX was the system, minus the actuarial discipline.
Do not moralize the symptom
The financial literacy sermon does not interest me. A generation bets for one reason. Betting is the only instrument left with a visible path from their income to a dignified life. The scandal is the base rate: a nurse's salary buys a nurse no home in the city she works in.
Fix the ladder and the casino empties on its own. Keep the ladder broken and every collapse is the house settling accounts. The gamblers were never the problem. The odds outside the casino were.