Wednesday, June 02, 2010

Wednesday Links

Some good reads today:

1) The Reformed Broker Josh Brown continues his hot streak with the witty "Zagat Sovereign Risk Reviews."

"UNITED STATES:  Locals claim to have "lost their taste" for this "mega-dining palace" but when rumors about the "cleanliness of certain European eateries" bubble up, the "bridge-and-tunnel crowd" flocks to US bonds and currency "like there's no tomorrow".  "Prices have gotten cheaper" here for most entrees, but many diners are "waiting on the sidelines" for "even better values".

BRAZIL:  The "wait-staff" can be finicky about "both tips and government bond auctions", but the "raw materials that come out of this kitchen" are "popular with diners" around the world.  The scene is made up of a burgeoning middle class - all grabbing a bite in between" buying homes and shopping for cell phones".  The bar scene is "youthful and ambitious" with a "taste for capitalism" not seen elsewhere on the Latin continent.  The place is "highly reliant on its homemade sugar", so "bring your sweet tooth"!

read the rest at his site.  If you're not familiar with Zagat's, you won't get the joke. If you are familiar, you should enjoy Josh Brown's take very much.

2) James Bianco at The Big Picture: "How Much Economic Growth is "Artificial?"  I would guess that  Bianco put "artificial" in quotes because he meant "Government generated," which may not be synonymous with "artificial," but anyway...

3) MISH: Students Get Buried In Debt, Who's to Blame?  I could probably write 5000 words on this subject, but I'm not sure I want to open that can of worms.  I'll just give you Mish's unsympathetic assessment of the situation:

"Supposedly "Ms. Munna and her mother, Cathryn, have spent the years since her graduation trying to understand where they went wrong."

It should take seconds. Going $100,000 in debt to get an interdisciplinary degree in religious and women's studies seem rather foolish to say the least. Exactly what kind of job did Ms. Munna expect to get with that degree?

Now she is working for a photographer and it is plain to see her degree is totally useless.

Ms. Munna and her mom should look in a mirror to see who to blame."

4) An interesting chart from McKinsey via Barry Ritholtz, regarding overoptimistic equity analyst estimates.

The American International Group scuttled the deal to sell its huge Asian life insurance arm to Prudential of Britain for about $35 billion, in a major setback to repaying the government for its 2008 rescue. 

Trying to appease its angry shareholders, Prudential had tried to keep the faltering transaction alive by lowering its price for the unit to $30.37 billion at the last minute. But A.I.G. rejected that proposal, issuing a terse statement on Tuesday that it would “not consider revisions” of the original terms.  



Daniel said...

Religious and womens studies? Really? Is there a degree somewhere in "mans" studies or am I missing the point?

Yangabanga said...

Daniel - the feminists would say everything else is "mans" studies.

Anyways the student loan issue was in the times this weekend. Baldly put, it doesn't make economic sense for everyone to go to college. There are plenty of jobs where you can earn more than the avg college grad without having to shell out $100k. Much like the promotion of home-ownership, a college degree has been pushed by the govt as an absolute good to be achieved at all cost, because you can only make more money in the end.

Or not.

And sure, why can't tuition rise at 3x inflation (or more!) when there's more money for everyone in grants, loans, etc.

Unfortunately this tuition "bubble" won't pop, instead it will price out more and more people. At the end of the day perversely accomplishing exactly the opposite of what the govt wanted by giving away tax dollars for school.

Transor Z said...

My alma mater costs $50k+ for tuition, room and board. ARE YOU SHITTING ME?

Bachelors degrees = asset bubble

Social mobility is about the only thing that makes this country worth a damn right now, and it's slipping away right in front of us. News flash: $200k is a lot of money for millionaires to shell out, let alone average joes.

Sorry. I'm in a foul mood today.

EconomicDisconnect said...

College is a business that somehow has been able to capture one of the biggest desires of any parent: A good start for the kid.

100K for any liberal arts degree is begging for trouble, but even higher end degrees with that kind of front loaded debt are a huge hole. People do it, its like a cult, and the colleges rake in the cash.

I went to a state school and graduated with a BA in Science/Biotechnology with a grand total of debt ......3k.

I did a minor in "womens studies" but no one would accredit me for the kinds of research I did, HA!

Onlooker said...

"I could probably write 5000 words on this subject,..."

God, ain't that the truth. I also find it (depressingly) humorous that "we" are all still sitting around trying to figure out why higher education costs have risen so steeply over the last couple of decades. Let me count the reasons. But as you said, it would open up a huge can of worms that would take pages to completely flesh out.

It all just goes to the fundamental lack of knowledge and understanding that exists with regard to basic economic forces and cause and effects that exists in this country/world.