Vox Popoli

JP points to the recent Forbes article underlining the obvious for the benefit of those who haven’t been paying attention:

I have personal experience with this. I have one brother who graduated from St. Cloud State two years ago with a Business Admin degree who is currently waiting tables at Olive Garden in Maple Grove. I have another one who is getting ready to graduate from the Cloud this year who wants to go to Hamline for a law degree. He will have to use student loans as the folks said he was off the tit after St. Cloud. It is ironic because I went in the Navy after High School then went to work at a utility and worked my way up into management and make over $100k per year with no college. They both asked me how it was possible to do what I have done without college.

They do not understand that the degree just gets you a cubicle and that once you go to work you have to provide value. My answer was that I have created millions of dollars of shareholder value so in other words I am an earner for the company. They just sit there with a puzzled look on their face as if they never heard that one in any Business Administration courses. The one interesting observation is that talking with these guys and their friends they are pretty pissed that they bought the line from parents, school counselors, the media, et al that getting a degree was a ticket to the land of milk and honey and they are finding out it was BS. I told the one guy waiting tables to go to North Hennepin or North Harvard as we call it and get an HVAC ticket so he could work on furnaces and Air Conditioning units and he could probably make $80k per year. My stepmom got pissed and told me to mind my own business as her baby went to college and wasn’t going to be a working man. I laughed and shook my head.

There’s nothing inherently wrong with a university degree. But it’s not the Magic Vellum Ticket to effortless riches that so many people dumb enough to go into debt to pursue them assume it to be. The irony is that if you’re intelligent enough to figure out that you don’t need a degree in order to be financially successful, you’re probably smart enough to take advantage of having one. And vice-versa.

As numerous observers have pointed out, the college bubble should be the next to pop.

The insolvency of fractional reserve banks really isn’t news:

Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking. A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

At its core, fractional reserve banking is no different than investing with leverage. At any time, even small movement against the position will render it insolvent; obviously, that small movement has taken place. It looks as if the Japanese zombie bank phenomenon has finally crossed the Pacific.

Apparently his aides have realized that he’s not exactly fast on his feet:

About half-way through President Obama’s press conference Monday night, he had an unscripted question of his own. “All, Chuck Todd,” the President said, referring to NBC’s White House correspondent. “Where’s Chuck?” He had the same strange question about Fox News’s Major Garrett: “Where’s Major?”

The problem wasn’t the lighting in the East Room. The President was running down a list of reporters preselected to ask questions. The White House had decided in advance who would be allowed to question the President and who was left out.

This is seriously pathetic. Second Coming of the Great Communicator? He’s more like the second coming of George W. Bush, with added “uhs” and “ums” Barring the exhibition of some hitherto undemonstrated competence, Mark Tapscott may well be right about this president being a one-termer.

Bumble, bumble, spoil and stumble…. New Hampshire Republican Senator Gregg just withdrew his name from consideration for the nomination to D’ohbama’s cabinet.

Bruce Bartlett omits a rather significant pair of dates:

The history of anti-recession efforts is that they are almost always initiated too late to do any good. This chart, based on recession timelines from the National Bureau of Economic Research, shows the enactment of stimulus plans is a fairly accurate indicator that we have hit the bottom of the business cycle, meaning the economy will improve even if the government does nothing.

Of course, the two missing dates on that little chart are 1930 and 1934… and to argue that the existence of the stimulus package demonstrates that the contraction is ending strikes me as more than a little myopic.

The UK admits the ugly truth:

The UK’s official statistician weighed into the debate about foreign workers yesterday by highlighting the growing numbers of immigrants getting jobs while the British workforce declines. On the day that figures showed the number of people unemployed at a 12-year high, the Office for National Statistics chose to reveal that the number of foreign workers increased by 175,000 to 2.4 million last year while the number of British workers fell by 234,000 to 27 million.

I find it amusing that supposedly the story is how the statistical office “chose to reveal” the facts at an inopportune time… like when it might actually tell people what they already know is happening. Mindless “immigration = economic growth” people should stop and think about the matter for five seconds; if mere numbers are the primary determinant of economic growth, then China and India should have been the wealthiest nations in the world for some time now.

It is becoming increasingly obvious that international free trade, open immigration, and multiculturalism do not deliver the supposed benefits that justified their embrace. They have, instead, contributed to the ongoing contraction.

It’s all about the socialization:

An exclusive CBS 2 investigation discovered Treveon Martin is one of at least 818 Chicago Public School students, since 2003, to allege being battered by a teacher or an aide, coach, security guard, or even a principal. In most of those cases – 568 of them – Chicago Public School investigators determined the children were telling the truth….

But even more alarming, in the vast majority of cases, teachers found guilty were only given a slap on the wrist.

The interesting thing is that if you do the math, it becomes apparent that the Chicago statistics indicate at least 18,851 students can be confirmed to have been beaten up in American public schools by teachers every year. That’s a one in 900 chance of being physically assaulted by a teacher, which makes attending public school more dangerous for children than using a chain saw, mowing the lawn, or shooting off fireworks.

And that’s just the kids who are aren’t afraid to complain about it….

A quant squint explains why bank traders tend to behave so irresponsibly when analyzing risk/reward probabilities:

Suppose that instead of betting on the biased coin you join in with all your colleagues and bet on the same toss of the first coin. Now you all win or lose together, the odds are even and the probability of getting your bonus is 50 percent. This is significantly higher than if you’d done the “responsible” thing of helping your bank to increase its expected return and decrease its risk.

This example makes it clear that your interests and those of the shareholders and depositors can be complete opposites. They probably didn’t teach you that at business school.

The fact that the federal government will then step in and bail out the bank – ensuring that bonuses are paid even in the event of failure that would normally result in bankruptcy – can’t help but exacerbate the undesirable appetite for foolish and unprofitable risk-taking.

The Treasury Secretary talks:

“As President Obama said in his inaugural address, our economic strength is derived from ‘the doers, the makers of things.”

True.

“The innovators who create and expand enterprises.”

True.

“The workers who provide life to companies and, with their earnings, support families and invest in their future… This is what drives economic growth.”

True, in combination with the first two statements.

“The financial system is central to this process, transforming the earnings and savings of American workers into the loans that finance a first home, a new car or a college education, the credit necessary to build a company around a new idea.”

Partially true, but the underlying implication is false. Credit only allows the speeding up of the process. This is not necessarily a good thing.

“Without credit, economies cannot grow, and right now, critical parts of our financial system are damaged.

The financial system may be damaged, but it is not critical and the first part of the statement is totally false. Most economic growth throughout human history has taken place in the absence of credit, but rather has resulted from savings. This savings can also be used as credit, or leveraged into credit inflation, but its main use is for non-credit investment or delayed consumption. It’s worth noting that as every AGDer knows, credit in its inflated form is the primary cause of the investment misallocations and overstimulated consumption that cause economic contraction.

Newsweek finally admits the obvious:

We remain a center-right nation in many ways—particularly culturally, and our instinct, once the crisis passes, will be to try to revert to a more free-market style of capitalism—but it was, again, under a conservative GOP administration that we enacted the largest expansion of the welfare state in 30 years: prescription drugs for the elderly. People on the right and the left want government to invest in alternative energies in order to break our addiction to foreign oil. And it is unlikely that even the reddest of states will decline federal money for infrastructural improvements.

If we fail to acknowledge the reality of the growing role of government in the economy, insisting instead on fighting 21st-century wars with 20th-century terms and tactics, then we are doomed to a fractious and unedifying debate. The sooner we understand where we truly stand, the sooner we can think more clearly about how to use government in today’s world….

The architect of this new era of big government? History has a sense of humor, for the man who laid the foundations for the world Obama now rules is George W. Bush, who moved to bail out the financial sector last autumn with $700 billion.

With the exception of a few die-hards at National Review, Townhall, and Red State, I think most conservatives will finally admit that George W. Bush did not have, as so many people insisted as late as 2006, a double-secret conservative plan. Like his father before him, like the neocons, and like the NAFTA brigade, he was a socialist wolf in the Republican fold.

I had always thought that with the various Patriot Acts and the assertions of the imperial executive branch, Bush was laying the groundwork for Hillary-style fascism. But it’s arguably worse that Bush’s economic quasi-socialism has instead paved the way for Obama’s blatantly socialist injection. The situation hasn’t gotten to the point where Washington can hope to reach for complete central control yet – his bumbling persona should make it obvious that Obama is to play Hoover, not FDR – but it’s clear that the crash which will be ironically precipitated by the “stimulus” which is purported to avert it should set the stage for whoever follows him to play the FDR role of national savior.

I could be wrong; certainly Obama’s supporters wish to think of him as the leading man and he has attempted to act in that capacity with his cult of personality. But the size of the crisis is one magnitude larger than 1929 – Grand Supercycle in Elliott Wave speak – so one has to conclude that we are most likely in the early stages of Act One in a play that will last for a decade or more. Regardless, Republicans have absolutely no one to blame but themselves for wasting what was a historic opportunity to pursue small, limited, and Constitutional government.