Saturday, December 24, 2011

Everyone Has His Own Facts

The Glittering Eye

James Pethokoukis produces seven different charts on the economy over the last several years, decade, thirty years, and dating back to 1916, proclaiming them the "most illuminating economic charts of 2011". The first chart is the infamous chart of projected unemployment deployed by Obama White House economic advisors Jared Bernstein and Christina Romer, updated to the present day, and which may well sink a second Obama term. The best that can be said about it is that they were wrong.

The second illustrates the shockingly rapid decrease in the size of the work force since 2008, without which the U-3 unemployment rate would be above 11%. I don't believe that the Great Depression of the 1930s was the Great Vacation and I don't believe that about the late recession and subsequent weak recovery, either.

Others include a chart of median income and consumption since 1980 (a different take on the declining median incomes story), a chart of the percentage of total wealth possessed by the top 1% of income earners since 1916, a comparative chart of recoveries from recessions over the last 30 years, and a projection of the rising level of public debt.

For each of the charts there's probably another chart that illustrates its opposite or places the blame on somebody else. What I think that most strongly partisan Republican and strongly partisan Democrats miss in the food fight is that the number of Americans affiliated with either party is actually falling and the number of independents is rapidly overtaking the number of registered Republicans. I think they care more about what will be done than about whose fault it was.

What is President Obama going to run on in 2012? That it's all Bush's fault and that four more years of Congressional gridlock is just the ticket for healing the country's ills? It's more likely he'll try to emulate Harry Truman and run against the do-nothing Congress which seems like a pretty good strategy considering Congress's popularity is substantially lower than his. Employing that strategy without undermining the Democrats' continuing control of the Senate will be extremely delicate.

And then there are the pesky facts. President Obama got very much what he asked for in the first two years of his term. Largest fiscal stimulus in the history of the Republlic? Check. Continuing the bailouts started by the Bush Administration? Check. Healthcare reform? Check. Don't like the Bush tax cuts? The Obama White House asked that they be extended. Blaming the White House's asking for the wrong things on Bush or the Republican House may not be that easy a sell.

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The 7 most illuminating economic charts of 2011 « The Enterprise Blog

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@preciousliberty, 12/24/11 2:45 PM

Precious Liberty (@preciousliberty)
12/24/11 2:45 PM
ACORN Officials Shred Documents, Fire Workers After Exposed As Organizing Occupy Wall Street -

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Sunday, December 18, 2011

With More Vacation Days and Separate Travel, Price of Obama’s Annual Hawaiian Holiday Rises | Hawaii Reporter

Found this interesting link on the Drudge Report:

With More Vacation Days and Separate Travel, Price of Obama's Annual Hawaiian Holiday Rises | Hawaii Reporter

Get iDrudgeReport on your iPod Touch, iPhone or iPad free at the iTunes Store:

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Saturday, December 17, 2011

Spengler » Thomas Friedman and the Higher Education Bubble


That Thomas Friedman would spout stupidity and anti-Semitism surprises me no more than the appearance of a gumball after I put a quarter into the machine and turn the knob. But one line in the New York Times' calumnist's (sic) Dec. 13 tantrum against Israel was worth a double-take:

I sure hope that Israel's prime minister, Benjamin Netanyahu, understands that the standing ovation he got in Congress this year was not for his politics. That ovation was bought and paid for by the Israel lobby. The real test is what would happen if Bibi tried to speak at, let's say, the University of Wisconsin. My guess is that many students would boycott him and many Jewish students would stay away, not because they are hostile but because they are confused.

Why on earth is the "real test" at the University of Wisconsin? For liberals, the only people who count are the smart people, because it is an article of faith that  social engineering can fix all the world's problems, and a logical conclusion that only smart people qualify as social engineers. It doesn't matter what the dumb people think. They are the ones who need to be socially engineered. To Friedman, it is irrelevant whether Americans at large support Israel by a 4:1 margin or better, and that support for Israel is growing steadily, as the Gallup Poll consistently shows:

Middle East Sympathies, Full Trend, 1988-2011

That poll includes dumb people, so it doesn't count. To Friedman, what matters is what university audiences might think. The insularity of the liberal mind is astonishing. It brings to mind the anecdote about Emperor Ferdinand of Austria (deposed for incompetence in 1848). He went hunting and shot and eagle. The bird fell to his feet, and Ferdinand said, "It's got to be an eagle — but it's only got one head!"

The American university system exists for the most part to produce the social engineers who will fix all the world's problems. During the 1960s, those of us who had the misfortune to attend the better colleges were taught that our mission was to make the world perfect, through the Great Society, arms control, internationalism, disarmament, and so forth. When the Vietnam War and the urban riots of the 1960s showed that the liberalism of our elders had not fixed the world's problems, we abominated them, and pursued even more radical versions of social engineering. The radicalization of the universities produced a generation of clever people unsuited to productive activity in the real world but skilled at bloviating, and they became the tenured faculty of today. And their salaries, privileges, and perks continued to grow to the point that $50,000 in annual tuition barely covers them. Overall CPI is up 70% since 1990, but tuition and fees have risen by 300%.


Source: Moody's

Meanwhile the hard-science faculties of major universities (as well as the better music conservatories) filled up with foreign graduate students, mainly Asians. As I noted in a recent post, MIT's Chinese graduates now get higher starting salaries if they return home. The most disturbing report of all was a UCLA study showing that only 40% of students who initially chose a science/engineering/math major finished a degree within five years (for blacks and Latinos, the completion rate was closer to 15%). Americans simply won't work hard enough.

Rather than produce smart people, the university system has dumbed America down. After two generations of academic wheel-spinning, the transformation of universities into Maoist re-education camps with beer kegs has ruined their practical value. The giant sucking sound you hear is the air going out of the higher education bubble. As the New York Times reported in a Nov. 23 feature, "One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor's degree on its own no longer conveys intelligence and capability."

Student loans, with a default rate of 8.8%, are the new subprime debt.

The only good news here is that liberal mainstream culture can't afford to brainwash as many American kids as it used to. Prof. Harvey Mansfield of Harvard University likes to say that the big question in American politics is whether the red states can produce kids faster than professors from the blue states can corrupt them. The lure of the elite universities was the promise that kids could have their cake and eat it, too, that is, save the planet and drive a Volvo. The dashed hopes of American students promote the sort of misbehavior we see in the Occupy Wall Street protests. They would do better to sue their universities for fraud and demand a return of their tuition, with interest. Somehow, I don't expect quite the same level of mobilization for Obama in 2012 as we saw at the universities in 2008. The kids won't have gas money, let alone cars.

The existential question for liberalism becomes: If you so smart, how come you ain't rich? Who cares what an audience of soon-to-be-unemployed kids at the University of Wisconsin might think? With their heads stuffed with literary theory, gender studies, and environmental pseudo-science, they are barely qualified for the cubicle jobs they will obtain if they are lucky. There is some value to a B.A. of any kind; it teaches you to read, memorize, show up on time and repeat what you are told. College graduates, at least, can read the new job manual, which explains why their unemployment rate is much lower than the national average. But few of them will live well, and almost none up to their expectations.

Liberalism, like cancer, is a self-liquidating malady. Eventually it kills the patient. Secular Americans, mainline Protestants, loosely-affiliated Catholics, and Reform and Conservative Jews breed like Germans or Italians, with fewer than 1.5 children per female. By contrast, Hispanic Catholics have 3 children, and evangelicals 2.6 children. America is like Schroedinger's Cat, in a superposed state of being dead and live. And long before demographics catch up with liberal culture and extinguish it, like the post-Alexandrine Greeks or the 5th-century Romans, the economic destruction wrought by liberal education will have impoverished most of a generation of American young people.

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Joe Biden. Jon Corzine. He`s The Smartest Guy That I Know.

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Just How American Is The Boeing 787 Dreamliner? (BA)

Business Insider

Boeing is one of the great American brands.  But most people don't realize that most of Boeing's airplane parts come from external vendors from all over the world.

Below is a diagram from Goldman Sachs' 100 favorite charts (via Zero Hedge).  It reveals just where all of the parts come from for the Boeing 787 Dreamliner.

Basically, American companies make the front and back of the plane.  The rest come from all over the world.

787 dreamliner

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Monday, December 12, 2011

Wake Up And Smell The Espresso (Education) in [Market-Ticker]

Wake Up And Smell The Espresso (Education) in [Market-Ticker]

Here we go again...

Laura Sayer, unsure of what she wanted to do after graduating from college in 2006, figured a master's degree was "a safe bet."

With $5,000 in undergraduate loans from her time at the University of Cincinnati, Sayer was set back $50,000 more after completing the Interdisciplinary Master's Program in Humanities and Social Thought at New York University. The 27-year-old now makes about $45,000 a year as an administrative assistant for a nonprofit group, a job that didn't require her advanced degree.

More people are losing the same gamble as a 33 percent jump in U.S. graduate school enrollment in the past decade, coupled with an 80 percent surge in tuition and required fees, runs headlong into a weaker job market. Universities are fueling the trend by offering more one- and two-year programs in areas from environmental science to sports management that rarely come with financial aid other than the option for loans.

And how does that happen in a free market for loans?

It doesn't.

Why not?  Because nobody in their right mind would loan you $50,000 for two years of school to complete a Masters if there was not a decent return on the investment, which means that your income expectations would be boosted by more the fully-laden interest-inclusive cost over the next ten years (the typical repayment period) from where you are without it.

Yet Laura was able to source the money.  Why?

Because the financial industry bribed, cajoled and scammed its way into turning that debt into something that Laura could not discharge in bankruptcy.  As such there was no risk for the lender in making the loan and they didn't give a damn that there was no reasonable expectation that Laura would find a job that paid at least $10,000 a year more with her Masters than she had before it -- a job that in addition would actually require the Masters to obtain.

Remember, the lender always has superior information because they have the benefit of all the loans they made before and how they performed.  They also have spent a lot of time and money modeling loan performance and they thus controlled all the variables that went into those models.  As such they are, on an "actuarial" (across the entire universe of these loans) basis far more knowledgeable than Laura is about whether she will be able to pay and they know what factors control for that success -- and which do not.

Laura has none of this information.  She knows only one thing -- how hard she is wiling to personally work, and she has some idea of her personal aptitude.  That's all.  She's at a severe disadvantage in this evaluation.

This is why bankruptcy was written into the Constitution and why it's so important.  The threat of the borrower declaring bankruptcy and avoiding the debt taken on is the only market check and balance that works to restrain predatory and abusive behavior by lenders.  With it no lender intentionally makes a foolish loan because while the borrower has their credit rating ruined the lender loses their actual investment.

This intentional distortion, which the lenders and government pressed for and profit from, must be addressed.  There is no student and no family that should ever consent to a non-dischargable student loan under any circumstances and no adult worth the title "parent" should be willing to provide or file any document related to qualification for same, including but not limited to a FASFA.  Among other things it is none of the damn government's business what income and assets a parent has in relationship to their now-adult offspring, as their obligation to provide for said offspring ended at the age of 18 years.

We will never solve the problem of out-of-control educational costs until parents and students stand en-masse and simply refuse to cooperate with this rank corporate-sponsored and government-assisted financial rape.  Neither the universities or the lenders are your friends -- they're predators, you're their "meat", and part and parcel of their predation is capitalizing on our youth's inexperience and a drilled-in "trust in authority" (false and malicious) claim that has been foisted off on them during their previous years in school.

It's that simple.

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Thursday, December 8, 2011

“Obama’s economic plan? Back to the ’70s!”

protein wisdom

Which means that we have to stuff a flux capacitor into a Firebird rather than a DeLorean — but that we'll still have to stomach a lot of Yes and Chicago. I guess is the point.

James Pethokoukis:

[...] what Obama is really saying is this: "Let's go back to the 1970s." It was a Golden Age of Equality, with the top 1 percent's share of national income at its lowest level of the 20th century. And the nostalgia surely doesn't stop there. It was also a time of strong unions, expensive oil, regulated industry and high tax rates. This is exactly the Obamacrat agenda. Of course, the 1970s were also a time of economic chaos and stagflation that led voters in 1980 to reject Jimmy Carter by a crushing landslide. Yet Obama wants give that formula another shot.

[...] Back during the success-punishing 1970s, the top marginal tax rate was 70 percent. And guess what? Liberal economists such as Paul Krugman, Brad Delong and Peter Diamond — whose nomination by Obama to the Federal Reserve thankfully failed in the Senate — think the top tax rate should zoom back there again. More evidence that Clintonomics is dead in today's Democratic party. Then again, Obama, like many Democrats, never thought the Reagan tax cuts made much sense. As Obama wrote in "The Audacity of Hope: "The high marginal tax rates that existed when Reagan took office may not have curbed incentives to work or invest … but they did lead to a wasteful industry of setting up tax shelters." So the only downside was excessive tax planning?

[...] Here is the real record of cutting taxes and regulation: The U.S. economy grew at an average pace of 3.3 percent from 1983-2007, inflation — the scourge of the 1970s — was slayed, and the stock market rose by 1,400 percent. Median middle-class incomes rose by roughly 50 percent. (These numbers are even more impressive when you recall that heading in the 1980s, experts were predicting a dystopian, Solyent Greenesque, Age of Limits future for America.) Obama would be lucky to fail like this.

Sure, median middle-class income exploded. But still, others had more — and that's what the income inequality argument is all about: taking what others have and spreading it out evenly, even if that means we wreck the very process that allowed for that 50% real wealth increase.

The left wants us to envy the wealth of others rather than embrace the fruits of wealth production itself — by way of a proven economic system that raises the standard of living for even those at the bottom of the "income disparity" scale such that our poor mirror much of the world's "rich" (they have cars, DVD players, computers, flat screen tvs, shelter, food, etc.).

And it's all so they — rather than a disinterested and organic free market — can direct wealth. The free market system takes away the power of the central planner. Which is why the central planner has to kill the free market system to consolidate power.

That they use class warfare and emotional sophistry to gin up outrage in those their institutions have trained to be useful idiots is not surprising. But surprising or not, the totalitarian impulse must nevertheless be identified, illuminated, and soundly defeated — each and every time it rears its fork-tongued face.

To borrow from that great freedom fighter, Kyle Reese, "Listen, and understand. [Socialist Utopianism] is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead. [Or at the very least, it's made you it's worker bitch].

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Sunday, December 4, 2011

Can you guess what the 'worst-run states in America' award-winners have in common?

Doug Ross @ Journal
The financial website 24/7 Wall St. analyzed the worst-run states in America. Can you guess what the worst three states have in common?

48. Michigan
> State debt per capita: $2,963 (21st lowest)
> Pct. without health insurance: 12.4% (18th lowest)
> Pct. below poverty line: 15.7% (15th highest)
> Unemployment: 11.1% (3rd highest)

Michigan has arguably suffered more than any state in post-industrial America. The state is one of just four with a credit rating of AA-, although its debt per capita is actually below average. The state ranks among the worst in the country for violent crime, unemployment, foreclosures and home price decline.
Source: (September, 2011): From the Census Bureau's American Community Survey for 2010, the percentage of residents 25 or older with a high school diploma

49. Illinois
> State debt per capita: $4,424 (13th highest)
> Pct. without health insurance: 13.8% (23rd lowest)
> Pct. below poverty line: 13.1% (25th lowest)
> Unemployment: 10% (10th highest)

Illinois has fallen from 43rd last year to the overall second-worst run state in the country. The state performs poorly in most categories, but is worst when it comes to its credit rating. Illinois has a credit rating of A+, the second worst given to any state, behind only California. The state has been on credit watch since 2008 because of budget shortfalls and legal challenges against then-governor Rod Blagojevich.

50. California
> State debt per capita: $3,660 (21st highest)
> Pct. without health insurance: 18.5% (8th highest)
> Pct. below poverty line: 14.5% (tied for 21st highest)
> Unemployment: 11.9% (2nd highest)

California has moved down one slot on from last year to earn the title of the worst-run state in the country. In the fiscal year 2009, the state spent $430 billion, roughly 14% of all the money spent by states in that year. Compared to its revenue, the state spent too much — California had the 10th lowest revenue per person, and spent the 15th most per person. California is the only state in the country to be rated A-, the lowest rating ever given to a state by S&P. Despite the huge amount the state spends each year, conditions remain poor. California has the second-lowest percentage of adults with a high school diploma in the country, the second-highest foreclosure rate and is tied for the second highest unemployment rate in the U.S.

What they have in common is this:

• Decades of unchecked Democrat control at every level of government

• Massive, bloated, public sector unions that are intertwined with the Democrat Party and demand increasing percentages of the economy; they have but one aim: to enrich themselves at the expense of the taxpayer

• Sanctuary cities that attract illegals, programs that offer easy access to welfare payments and government subsistence programs, high rates of single-parent families, and therefore high levels of urban crime

You would think that someone in legacy media would actually analyze this data and report on it, but then again, I've always been a dreamer.

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Saturday, December 3, 2011

The Government Is Expropriating Private Wealth at a Rapid Rate | The Beacon

The Government Is Expropriating Private Wealth at a Rapid Rate

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About a month ago, I posted in regard to what I called "the euthanasia of the saver." This comment had to do with the fact that nominal interest rates in the United States for financial investments such as bank certificates of deposit and bank savings accounts—the kinds of investments traditionally employed by retired persons and small savers, who wish to gain income without exposing their funds to great risk of capital loss—now fall considerably below the rate of inflation, and hence the real (or inflation-adjusted) yield on such investments is negative. That is, the nominal payoff is insufficient to offset the loss of purchasing power of the money invested.

About a month before I wrote my commentary, my old friend Richard Rahn had, without my noticing, written on the same issue in a commentary article published in the Washington Times, but he had gone beyond the simple point I made. Rahn notes that besides suffering the loss of wealth occasioned by the negative real yield on such investments, the investor has to pay tax on the nominal yield—truly a case of the government's adding insult to injury. He notes that given the currently prevailing rates of interest, rate of inflation, and tax rates, a small investor who earns a nominal yield of 1% and pays a 20% marginal tax rate, while the rate of inflation is 3.5 %, actually ends up paying a real tax rate of 370%. For example, an investor buys a $100,000 CD, earns $1,000 in annual interest, pays a tax of $200, and incurs a loss of $3,500 in purchasing power on the invested principal. Total (nominal) income is $1,000; total real tax (nominal tax plus inflation tax) is $3,700.

This expropriation of private wealth is not accidental. It is the joint product of the Fed's near-zero interest-rate policies, the Fed's money supply increases that underlie the current rate of inflation, and the tax rates established by Congress and administered by the IRS, including the taxation of nominal interest earnings even when they amount to real losses of capital, rather than genuine earnings. The government clearly aims to expropriate private wealth on a massive scale. The only plausible alternative interpretation of these policies requires us to believe that the government officials who set these policies are complete idiots about basic economics.

The expropriation amounts to a huge sum. For example, the value of the Non-M1 component of the monetary aggregate M2—consisting of savings and small time deposits, overnight repos at commercial banks, and non-institutional money market accounts—currently amounts to more than $7.5 trillion. If investors lose 2.7% on this investment each year (nominal yield minus the sum of the amount lost via taxation of nominal interest and the amount lost via the inflation tax), the loss amounts to about $204 billion. Because this type of investment is not the whole of the investments subject to this effect, the total amount the government is expropriating comes to a much larger sum. Because this taking continues year after year, so long as current conditions persist the continuation of this expropriation for another year or two will bring the cumulative amount expropriated in this fashion to more than $1 trillion since the onset of the recession and the Fed's adoption of the near-zero interest-rate policies, along with its allowance of substantial growth of the money stock and the consequent decrease in the money's purchasing power. This is a rough calculation for the purpose of illustration. My point does not hinge on a precise estimate, because any well-founded estimate is sure to amount to a gigantic sum.

In sum, the government's monetary and fiscal authorities are currently engaged in the expropriation of private wealth on a vast scale. Entire classes of investors—especially people who saved during their working years and expected to live on interest earnings on their accumulated capital during their retirement years—are being steadily wiped out. Astonishingly, this de facto robbery  is being committed by a government that misses no opportunity to shed crocodile tears over how single-mindedly it seeks to protect the weak and helpless among us.

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Dead Movement Walking: Top Six Signs the Left And Mainstream Media Have Hung Occupy Out to Dry - Big Journalism

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