Archive for January, 2011
January 21, 2011
MICHAEL BLOOMBERG’S Pension Reform Misfire.
IN THE MAIL: From Eric Alterman, Kabuki Democracy: The System vs. Barack Obama.
AUTHOR Reynolds Price has died.
HIGHER EDUCATION BUBBLE UPDATE: “Nearly half of the nation’s undergraduates show almost no gains in learning in their first two years of college, in large part because colleges don’t make academics a priority, a new report shows.” Check out the chart on how college students spend their time. Is it worth $50K/year?
Related: “The big surprise is that this is news to anybody.” “The next financial bubble is out there. It is comprised of people like your son who are carrying enormous debt without any prospect of paying it off. They are going to default. It’s our fault, you say. Well, you say that now. But if we gave your son the grades he deserved you both would have screamed foul and due processed us to death. If your son is a member of some protected class, we would have had to defend against the accusation that we discriminated against him. Anyhow, he got more than he deserved, and the rest of us subsidized his education directly or indirectly with our tax dollars. Of course, you do know that we are going to have to pick up the defaults, just as we picked up the sub-prime mortgages. . . . When the defaults come, we will print more money and maybe foreclose on a few for-profit institutions. There will be congressional hearings, a few scapegoats from the for-profit world, and a few horror stories about exploitative student loans. There will be an academic Enron and an academic Countrywide. When the smoke clears, the academic AIG will have bailed out the academic Goldman Sachs for one hundred cents on the dollar. And it will be business as usual.”
UPDATE: A reader emails:
The education bubble is out there, but it won’t burst the same way the housing bubble did. A person can walk away from their house and their credit cards, heck maybe even their spouse and kids, declare bankruptcy, and be free from all consequences 10 years later. By law, student loans simply don’t work that way. I’m really not sure it’s even POSSIBLE to default on student loans.
Getting out from under college loans was an industry for the generation who were undergrads in the 60s and 70s, but by the time I went through in the late 80s, Congress had closed all the loopholes (that I knew of at any rate), and they seem quick to close any that open even today. You can’t escape student loans via bankruptcy, they’re explicitly exempt. Student loans never, ever go away due to non-payment. They damage your credit rating, perhaps more than other debt because there’s so much of it. Penalties climb and do not go away.
Yes, it’s possible to go without paying them. I went for eight years doing exactly that, and had the sub-300 credit rating to prove it. When I needed a good credit rating, to buy a house in my case, I had to get them sorted out, and got assessed a fat $23k penalty for the privilege. That may be a KIND of default, but not (IMO) the same sort as a mortgage default.
That’s true. And as I’ve said before, any other industry that encouraged its customers to go into debt like this would be characterized as predatory.
VICTOR DAVIS HANSON: The Bloomberg Syndrome: When global sermonizing trumps local competence. “Quite simply, the next time your elected local or state official holds a press conference about global warming, the Middle East, or the national political climate, expect to experience poor county law enforcement, bad municipal services, or regional insolvency.” Or all of the above!
ERIC HOBSBAWM: Old Stalinists Seemingly Never Die: They Just Keep on Propagandizing. And they’re on the same moral plane as old Nazis, but they get better press.
TODAY ONLY: 32″ Toshiba LCD HDTV for $349.
L.A. TIMES: Just as things were looking up, Obama’s annual job approval average puts him near the postwar bottom. “As if the poll showing improved approval of Congress under partial Republican leadership wasn’t discouraging enough, now comes a new survey showing President Obama’s second-year job approval near the bottom of presidents elected in the last six decades or so.”
REASON TV: What Happened To The Antiwar Movement?
They used to be useful idiots. Then they stopped being useful.
Related: Enjoying Glenn Greenwald’s lamentations. “As I’ve said many times, President Obama has been far better on war issues than I feared. He really has adopted many Bush war policies that were once portrayed by his side as ‘shredding’ the Constitution. But the president’s most left-wing and anti-war political allies from the 2008 campaign are noticing. It’s the lamentations part that I particularly like.”
BYRON YORK: House GOP begins long drive to dismantle Obamacare. “Everyone knows House Republicans (along with three Democrats) voted Wednesday to repeal Obamacare. But fewer people know what those same House Republicans — this time, with 14 Democrats — did Thursday. By a vote of 253 to 175, the GOP directed key House committees to report on ways to lower health care premiums, allow patients to keep their current health plans, increase access to coverage for those with pre-existing conditions, and decrease the price of medical liability lawsuits. In other words, the committees are beginning work on replacing the House-repealed Obamacare with Republican health policies.”
THE HILL: House Dems Vow To Improve Messaging. Yeah, because that’s their problem. The messaging.
SMOKE AND MIRRORS? Seattle Times: China’s “New” Jet Orders Anything But.
The claim: A White House fact sheet released Wednesday to coincide with the state visit of Chinese President Hu Jintao said: “In preparation for this visit, several large purchases have been approved including for 200 Boeing airplanes. … The approval, the final step in a $19 billion package of aircraft, will help Boeing maintain and expand its market share in the world’s fastest growing commercial aircraft market.”
What we found: The deal President Hu signed does not include any new jet orders.
Delivering the formal approval during Hu’s visit is designed to make the Chinese government appear responsive to U.S. concerns about the balance of trade.
However, all of the airplanes in the sale were announced and booked by Boeing as firm orders over the past four years. Chinese airlines had already paid nonrefundable deposits and signed contracts for the jets, most of them as far back as 2007.
Plus this: “The White House announcement said the total value of the orders was $19 billion. But that’s the list price, which airline customers never pay. Based on market data from aircraft-valuation consultancy Avitas, the actual price for those 200 planes is about $11 billion.”
PIGFORD UPDATE: Rep. Bishop takes heat over Breitbart videos about black farmers settlement.
More here:
In the video, Slaughter says that he met with Bishop in the congressman’s Columbus office, where he says Bishop told him that the program was rife with fraud, with payments being made to people who lacked farm ID numbers or who weren’t farmers at all.
Contacted by telephone Thursday night, Slaughter confirmed that the video accurately represented what he said.
Read the whole thing. Despite efforts to ignore it, this scandal doesn’t seem to be going away.
AUSTIN BAY: Tunisia’s Remarkable Revolt.
THIS MUST BE MORE OF THAT “SMART DIPLOMACY” I HEARD SO MUCH ABOUT: Obama Admin Lobbying Honduras To Allow Zelaya Back In? Are You Kidding?
PROF. JACOBSON: It Sounds So Much Better Read Out Loud.
WALTER RUSSELL MEAD: Black And Blue. “The collapse of the blue social model, a shift from federal to local power and a shift from government to the private sector are not race-neutral topics. It’s not just the underclass in the inner cities who face problems as the old models of subsidy and support become less sustainable; middle class African Americans compared to whites tend to work disproportionately in public sector jobs or in private sector jobs like health care that are heavily subsidized by government transfers. . . . you need to think seriously about what this means for the group in American life most closely tied to the failing blue system.”
JAMES TARANTO — WHO HAS REALLY BEEN ON A ROLL LATELY — goes barrelfishing.
SO ARE THINGS WORSE THAN THEY’RE LETTING ON? State Bankruptcy Option Is Sought, Quietly. “Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.” Well, why should retired public workers be any safer than Chrysler bondholders? Some of them were retired, too.
HIDDEN INFLATION: Your Favorite Products, Now 20% Smaller.
I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.
Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit. But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.
Healthcare reform, its advocates tell us, is fiscal reform. The healthcare reform bill passed last year increased government spending to cover the uninsured, but it also reduced the budget deficit by increasing various taxes as well. Because of this bill, the advocates say, the federal government is on a sounder fiscal footing. Repealing it, they say, would make the budget deficit worse.
So, by that logic, giving me $1 billion is fiscal reform as well. To be honest, I don’t really need the money. But if I can help promote long-term fiscal sustainability, I am ready to do my part.
I’m prepared to do it for half what Mankiw wants.
ARE BIOFUEL POLICIES fueling a global food crisis?