Inspiration

ReadyMade, one of my favorite magazines, reimagines the poster art of the (first) Great Depression.

Student Loan Delinquencies Are Up

A small blip, but a taste of things to come.

Loyalty, Like Trust, A Casualty of the Economy

Why would you show commitment to an employer who shows no commitment to you?

In Need of Cash, More Companies Cut 401(k) Match

Amazing Interview With a Chinese Banker

This guy manages $200 billion of investments in American companies and financial institutions--a fraction of the total $2 trillion we're into China for.


"People, especially Americans, started believing that they can live on other people’s money. And more and more so. First other people’s money in your own country. And then the savings rate comes down, and you start living on other people’s money from outside. At first it was the Japanese. Now the Chinese and the Middle Easterners."

There's more. I'm also really interested in what he has to say about how the crazy pay in the US financial system has distorted the labor market both in our country and even in his.

Update: Krugman makes the same point in his column today. "how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?"

What's Next for the Economy?

How about switching from greed, distrust, Ponzi schemes and panic to this simple-sounding goal definition:

"A successful strategy to green the economy involves environmental and social full-cost pricing
of energy and materials inputs, in order to discourage unsustainable patterns of production and
consumption. In general, such a strategy is diametrically opposite to one where companies
compete on price, not quality; externalize social and environmental costs; and seek out the
cheapest inputs of materials and labor. A green economy is an economy that values nature and
people and creates decent, well-paying jobs.

Source: UNEP

What's the Real Payoff?

Chronicle:

"Smart Money magazine decided to rate a limited sampling of 50 colleges based on what it calculates as the ratio between the cost of attending the institution and the average salary earned by a graduate. The results, SmartMoney says, are “pretty jarring,” often showing public colleges as giving students a much better long-term bang for the buck than their better-known private counterparts.

Among the findings, according to SmartMoney, is that the University of Georgia delivers a “payback” nearly three times that of Harvard University, and that the Universities of Delaware and of Rhode Island both outperform every Ivy League institution in the ranking."

Not a surprise to anyone who has experience with higher ed, and also not likely to significantly influence perceptions of true value in higher education.

The Role of Trust in Prosperity

The financial collapse is getting people to think about the human factors and values that underpin our formal economic structures. Anne Applebaum writes in Slate that gigantic frauds like Bernie Madoff's add up to make people far more suspicious and thus make it more difficult to conduct business. I was amused by this line:

"In other cultures—maybe most other cultures—very rich people are suspect by definition. Recently, I met a wealthy Russian and automatically assumed he was the beneficiary of some shady scheme: How else would someone from that part of the world get rich?"

There are plenty of people who automatically distrust / disdain the very rich here in America too, and not without reason.

Her line also put me in mind of a quote I read recently in one of my favorite magazines.

"In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.
Confucius"

Right On

"Debt Free at 50? Something Has to Change." A timely lament from Stamford, CT.

"With all this debt, how can I ever afford to buy a house? Or have children? What about paying for their education? These are things you don't think about so much when you're 18 and signing on the dotted line of the loan disbursement application. ..
The answer is not more loans, or stopgap tax credits, which don't help families who can't afford to pay up front. What we need to unshackle the future generation of this country is for colleges and universities to start charging students less. "

Or...alternatives to college that are more efficient and competitive than the current and higher-quality jobs across the board.

Citizen Jane Politics Interview

Read it here.

CJP: What do you see as the biggest financial/economic challenges facing young women in this time?

Anya: Paying off student loans and credit card debt, while negotiating those early career transitions in a down market. Young women are more likely to be worried about their health insurance too because we’re supposed to go to the doctor twice a year. I just got off the phone with a friend who is worried about losing hers.

Reality Check for Private Colleges

WSJ:
Colleges have something close to a monopoly; they can charge what they like because they have a captive audience. As Robert J. Massa, vice president for enrollment and student life at Dickinson College in Pennsylvania, told the New York Times earlier this month in an article on colleges' current financial strain: "What we've done in higher education is let our dreams and aspirations dictate our cost structure." The silver lining here is that, coupled with the hot breath of recent congressional scrutiny in the form of Iowa Sen. Charles Grassley's demands that universities cease hoarding their endowments, the hardships imposed by the financial crisis are forcing private higher education to reconsider business as usual. Applications to Binghamton University, part of New York's state university system, were up 50% this fall. A similar loss of market share by private colleges is no doubt taking place in other states

The Solidarity Economy

New phrase I just learned.
From the North American Students of Cooperation:
The Solidarity Economy (SE) is an alternative framework for economic development that is grounded in principles of solidarity, equity in all dimensions, participatory democracy, sustainability and pluralism...Many features of existing economies are likely ‘keepers', for example, environmental protections, minimum wage and labor regulations and public education. Other elements of the solidarity economy could be characterized as ‘economic alternatives' such as worker, consumer and housing cooperatives, land trusts, social currencies, community supported agriculture, social investment funds, participatory budgeting, green technologies, and the commons movement. Solidarity economy practices are also powerfully rooted in social and economic justice movements...

(photo: Chavez Coop)

What Will Happen to Obama's Youth Machine?

what do we do now?

The campaign can't decide what to do with this fabulous network of 13 million supporters now that Obama's, like, in charge. Same is true of MoveOn, really. I mean are they just a giant operation to buy television ads and sell stickers?

Obamaniacs, guess it's time to pick an issue and fight. You could stay in your neighborhood and help working families resist eviction and foreclosure. You could get all hardcore and organize your fellow young wage slaves working at crap jobs nationwide. (Get paid while you do political activism--until you get fired!) Campus Progress has various national campaigns going on if you're a college student. You could stand in solidarity with fellow vets your age or try to stop the war. Power Vote is doing great stuff on climate change. You could try to help restock your local food bank this winter. Or move to New Orleans and join a network of young professionals trying to reinvent an entire city.

The one thing not to do is wait for some DNC tools or anyone else to tell you what the youth agenda is.

College is Unaffordable: Reactions from Around the Web

Campus Progress: "If we really want to make sure that low-income students can go to school, we need to restructure priorities in higher education. Low-income students may be the most expensive to educate, but they also see the greatest economic mobility increases. That means it’s the best return on an investment."

The Chronicle of Higher Ed: (via Washington Monthly):" colleges could use technology to lower costs and thus student prices, but they won’t until the terms of competition change. "

Yahoo! News: "Historically during downturns, "states make disproportionate cuts in higher education and, in return for the colleges taking them gracefully, allow them to raise tuition," Callan said. "If we handle this recession like we've handled others, we will see that this gets worse."

Peer to Peer Student Lending

"Meredith comments: I’m sure this feels as much like news to you as the official declaration we’re in a recession yesterday. To add insult to injury student loan money is getting harder to come by. My husband and I were talking last night and wondering if direct-to-consumer lending (like Prosper) might eventually step in and play a role. I’ve heard it called the ultimate “patient capital” and seems like as much a safe bet as the markets right now."

There have been attempts to do social/ peer-to-peer student lending, including on Prosper where clubs of alumni were forming to loan to current students of their alma mater. Unfortunately that model is running into some regulatory problems just when students need alternative sources of capital.
In the future, average student loan balances will have to be smaller. I think that's the only sustainable option. Unfortunately that means a lot of dreams deferred until we come up with a more workable higher ed system.

Breaking : College Is Expensive

According to a new report from the National Center for Public Policy and Higher Education:
"published college tuition and fees increased 439 percent from 1982 to 2007, adjusted for inflation, while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families."

When something is unsustainable, it can't go on. I predict that in the recession ever-more families will turn to public colleges, online education, shorter degree programs, overseas education, or even pass up college altogether.

And no shock, the burden falls disproportionately on the poor. How can we have a meritocracy if one year at a public university costs more than half of the income of the poorest fifth of the population?

Money Flows East to West

“In 2007 the United States needed to borrow around $800 billion from the rest of the world; more than $4 billion every working day,” he writes. “China, by contrast, ran a current account surplus of $262 billion, equivalent to more than a quarter of the U.S. deficit. And a remarkably large proportion of that surplus has ended up being lent to the United States. In effect, the People’s Republic China has become banker to the United States of America.”

Overseas College For Less

NY Times:
With higher education fast becoming a global commodity, universities worldwide — many of them in Canada and England — are competing for the same pool of affluent, well-qualified students, and more American students are heading overseas not just for a semester abroad, but for their full degree program.
...This fall, at the National Association for College Admissions Counseling conference in Seattle, where admissions officers from American universities mingle with the counselors who help shape high school students’ college choices, there were representatives from the University of Waikato in New Zealand, Seoul National University in South Korea, Jacobs University Bremen in Germany, the University of Limerick in Ireland, as well as dozens more from Canada and Britain.

St. Andrews of Scotland , Prince Williams' alma mater, charges £11,350 or $16,955 for a US student. Cheap for an experience similar to a top private US university, plus international experience.

Get Ready for the Bursting of the Student Loan Bubble

Indianapolis Star:

"Although the U.S. has experienced economic downturns before, never has one converged with such high levels of student debt.Total borrowing for school has more than doubled to $85 billion in the 2007-2008 school year from $41 billion 10 years earlier, adjusted for inflation, according to the College Board, the research and testing concern."

About 24 percent of that is private loan debt, which has higher interest rates and less flexible repayment conditions, and is not backed by any government guarantee.
Student loan debt, like credit cards, are unsecured. This is a slow-motion disaster waiting to happen.