Mish's Global Economic Trend Analysis |
- Calpers Seeks Exemption From Bankruptcy Laws, Wants First-in-Line Payment Status; California, Illinois Completely Dysfunctional
- Empire State Manufacturing Index Declines 5th Straight Month; Profit Squeeze Underway
- Gloves Come Off in Google vs. Germany; Expect Newspapers to Lose by Winning; Buggy-Whips vs. Autos
- Readers Share Their Student Debt Reasons and Experiences
| Posted: 17 Dec 2012 07:46 PM PST Nearly every day there is another disgusting story regarding the outright parasitic behavior of public unions in California. Today I have a pair of recent articles to present. The first is entitled Californian's $609,000 Check Shows True Retirement Cost. That article is part of a stunning six-part series by authors Michael B. Marois and Rodney Yap. I encourage you to click on the link and read the entire piece. Also consider Calpers Bankruptcy Strategy Pits Retirees vs. All Others. The California Public Employees' Retirement System is trying to rewrite the rules for bankrupt cities, claiming that it should get paid before almost everyone else, including bondholders.Blatant Lies By Calpers Just listen to those pathetic lies by Glazier. California would be flooded with qualified people for every position if it could put contracts out for competitive bids outside of collective bargaining contracts. Taxpayers have to pay through the nose because corrupt California politicians are in bed with corrupt administrators and corrupt union officials. California, Illinois Completely Dysfunctional California and Illinois are uniquely, and completely dysfunctional with the most union corruption and the worst funded public pension plans in the nation. Bankruptcy is the only way to fix the problem, unless of course some corrupt judge protecting his own public pension rules in Calpers' favor. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
| Empire State Manufacturing Index Declines 5th Straight Month; Profit Squeeze Underway Posted: 17 Dec 2012 12:46 PM PST Inquiring minds are taking a peek at the Empire State Manufacturing Survey, a publication of the Federal Reserve Bank of New York. The December 2012 Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to decline at a modest pace.  Points of Interest
This was a weak report with business conditions contracting for 5 months and new orders also dropping. Profit Squeeze Underway  Note the margin squeeze on manufacturers. Prices paid are rising while prices received are on the verge of contraction. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
| Gloves Come Off in Google vs. Germany; Expect Newspapers to Lose by Winning; Buggy-Whips vs. Autos Posted: 17 Dec 2012 10:06 AM PST European newspapers, especially those in Germany, France, and Italy are upset that Google does not share ad revenue with them for headlines that come up in online searches. I am not talking about entire articles I am talking about links to articles. My position is that Google is actually doing the newspapers a favor. By posting headlines, the online newspapers get more hits (and thus more ad revenue) than they would otherwise. In this sense, Google is providing a free service and the newspapers should be happy that Google links to them at all. The newspapers and politicians do not see it that way and Gloves come off in Google v Germany. Google and German newspaper publishers are poised to trade blows at a parliamentary hearing at the end of January over plans to allow Germany's print media to charge internet search engines for displaying links to newspaper articles.Buggy-Whips vs. Autos Politicians and newspapers want to protect dying industries that cannot make it on their own. So they have concocted a policy that is tantamount to writing legislation to protect buggy whip manufacturers from the evils of the automobile. Quite frankly it's ridiculous. As I stated, Google is actually doing the newspapers a favor by linking to them. Google is doing the reader a favor by offering links to articles they might otherwise miss. Everyone wins actually. However, newspapers are dying so they want handouts. Politicians are nearly always ready and willing to provide solutions to non-problems if it will get them campaign contributions. Google has threatened to not link to news articles if the bill passes. Will that save the newspapers? How? Instead of getting some ad revenue they will get none. Will copyright legislation force readers to buy newsprint or online newspapers? If you think so, think again. Google will stop linking to news media in protected countries in favor of the same or similar story in other places. If the other search engines do the same, the result will be a decrease in ad revenue to the online newspapers in affected countries. Expect Newspapers to Lose by Winning Don't expect any clear thinking on this issue. Instead, expect politicians to pad their pockets with campaign contributions and for newspapers to lose ad revenue when the legislation actually passes. Indeed, the general rule of thumb is to always expect the worst when politicians attempt to "rebalance" anything. Nothing good ever comes from it. Depending on how the legislation is written, bloggers may not even be able to use Google translate to post snips of articles in certain other countries (not that we could find the articles in the first place if Google does not link to them). Google Campaign It took me a while to locate the Google campaign because the campaign was not "Protect Your Web" as the Financial Times stated, but rather "Defend Your Network - Verteidige Dein Netz" Here is the link to "Verteidige Dein Netz". Curiously, a Google translate in Firefox says the "URL is Invalid". However, a cut and paste of the translated text looks like this: "The Bundestag advises soon an intellectual property right. This should publishers against search engines and other services give them the right to prohibit results for press articles or make a payment dependent. For you it would be so much more difficult in the Internet to find the information that you seek. Defend your network, a single intervention against this world, mixing it for yourself and share this page with your friends!" The article contains a video and you can enter your name on a list to keep informed of the issue. I side with Google and I am pleased to help spread the word. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
| Readers Share Their Student Debt Reasons and Experiences Posted: 17 Dec 2012 01:00 AM PST In my post Trends in College Tuition vs. Bachelor's Degree Wages; Interesting Demographics of Student Loan Debt History I noted skyrocketing student loan debt, especially in the age group 30-39. See article for details. Since 30-39 is not the typical school demographic, I asked readers 30 years or older who are sitting on a pile of student debt to share their stories and reasons. A summary of reasons and email snips from readers follows. Reasons for Skyrocketing Student Debt in Age Group 30-39
Email Anecdotes Reader Steve, went back to school to become a special education teacher. He purposely loaded up on debt because "both our state and the federal government offered economic incentives in the form of student loan forgiveness to people entering that career path. Loading up on student loan debt was the only rational fiscal decision available to us." Reader Tom went into debt thinking it was a great deal because his loans were at a low rate for 30 years. He now has the cash to pay off his student loans but does not because he "bets that boring index/asset-allocation investing will average better than 3.6% nominal over the next 15-20 years." Reader Dave and his wife have a combined $90K in debt at a not so attractive rate of 6.8%. Right after he got his MBA Dave reports the "economy collapsed". Dave spent 2 years unemployed, accruing interest. "We'd like to buy a house, but instead we are paying the government back at excessive interest rates." Reader Colleen mentioned the divorce factor. Women with kids and who did not work previously may need to go back to school as a result of divorce. Reader Beth, age 30, says "I left undergrad with relatively little debt, but grad school killed me." Reader Jeremy suggests "some of the initial student loans are in the parents' names, adding to the 'over 30' demographic". He also suggests that right before the housing bust, "tens of thousands of people were getting $16,000 student loans to fund a 2 year real estate college." After the bust there was no way to pay the debt back. Reader Terry complains of automatic deferrals. Terry writes "My wife had initially asked for a deferment during one semester but after that, and even after repeated calls asking them to stop, they continued to defer payments and capitalize interest. You had better watch what is going on closely or you will suffer because the incompetence is incredible. Keep a sharp eye out or better yet do not go into student loan slavery, as I preach constantly to my children!" Reader Trish also notes loan deferments writing "I already owe more in compounded interest from having my loans on unemployment deferment than I will ever be able to repay in my lifetime. I am a responsible person who understands I owe someone this money for the education I received. But as things stand now,I will literally go to my grave owing on the loans. I know this is a horrible financial mess, but it may help to explain some of the odd stats." Reader Lucy writes "many employers are now requiring college degrees for jobs that shouldn't require one if you have commensurate experience. For example, one company I am very familiar with decided that all new hires who are not hourly factory workers must have a degree. They overlooked a very talented and experienced person who had 25 plus years of experience and more training and related skills than anyone with a master's degree. Business is definitely contributing to the college insanity." Reader Matthew delayed going to school, and instead got married and got a job after high school. His boss pushed him into management and "company policy was that management had to have a bachelor's degree." Matthew succumbed to the pressure and ended up getting divorced in the process. He now has his B.A. but also a mountain of debt, child support, and a job that pays $8/hour. Matthew writes "For twenty years I've been making $8 an hour. Of course, that figure is a lot less now than it was twenty years ago when I was just starting out. Would I do it again? No. Hell no. I wasted years of my life pursuing this thing, and got nothing more than debt for the effort. My entire situation sometimes makes me laugh when I think about it. Sometimes it makes me cry. Mostly it just makes me bitter. And I try not to think about it." Reader Drew writes "Throughout the 90s and 2000s, we obtained degrees which are not supported by income. As a result, we deferred monthly payment and/or missed payments over the last decade. It's easy to see how student loans fall to the back of the bus. I'm 39 and am slowly chipping away at my wife's master's degree." Reader Lynn writes "In Austin, television is filled with badly-acted ads from purported chef school students exhorting the opportunity to go to culinary school and become a professional in the food and hospitality industry. We're also bombarded with ads for car title loans, quick short term loans, etc. For people who are stuck, desperate, and not adept at critical thinking, such ads offer a glimmer of hope that will flicker out once they graduate. The offers to help are purely exploitative and I would guess if you scratched the surface of some of these entities, you would find the same players that are tied to Wall Street. Thanks for all the work you do trying to figure this stuff out, and then putting it out there for people to read. You are a rare soul." Reader George says "I had many classmates that were borrowing the maximum allowed (even if it wasn't necessary) simply because they could lock in fixed payments at 2.5%." George gets the quote of the day for his amusing comment "It's only a trillion dollars of totally unsecured, non-asset backed debt. What could possibly go wrong?" Reader Winston wrote a lengthy email asking "Where's the control group?" Winston is tired of studies that hype up salaries of graduates while ignoring those who drop out, and also wondering how much exceptionally bright kids would make if they simply did not go to college. Winston suggests salary comparisons ought to be based on equivalent SAT scores (those who graduated from college and those who didn't). Billionaire Dropouts Winston's line of thinking piqued my curiosity. Here are a few names on the Wikipedia list of college-dropout billionaires.
From Wikepedia, "According to a recent report from Cambridge, Mass.-based Forrester Research, 20% of America's millionaires never attended college." The report is from 2000, thus not so new, but the reference link is certainly catchy "Some Billionaires Choose School Of Hard Knocks". Think! If you are a brick-layer or painter, don't think schooling will turn you into a Java programmer. And if you are an out-of-work Java programmer, don't think a culinary school will turn you into a chef. Regardless of who you are or what you want to become, please think twice if you are considering going back to school to get a degree, especially a degree from a for-profit school churning out useless degrees for which there will be no job when you graduate. Student debt may become a trap from which there is no escape (and I have a lot of emails from readers that I did not quote) to prove it. Thanks to all who emailed their thoughts and stories whether I referenced them or not. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.  |
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