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I still don’t understand the half of it, but it sounds downright sinister when you read how they sold off their toxic assets and took out insurance, aka “credit default swaps”, to protect against a potential market crash.

I am fascinated by the rising cost of secondary education, how it seems to be spiraling out of control, how students can no longer afford to take out students loans, and how nobody in a position to care seems to do so.  Student indebtedness is hindering our economy and the notion that certain companies are making huge amounts of money on student loan interest is a shame. 

Now I understand the racket so much more.

As long as government is willing to “help out” with student loans, universities and colleges will keep raising prices, and the total cost of an education will keep soaring until one day it blows sky high, just as happened with mortgages.

Note that the loans are guaranteed by the government. Also note that student loans are not discharged in bankruptcy. Those two facts are all you need to understand why the financial industry as a whole consistently champions the promise of postsecondary education and its value to American society. No one really gives a damn about the students. Worse yet, were funding cut off, there would be student outrage over it when stopping funding is exactly what is needed to bring costs down.

[via]

Calvin Trillin puts it succinctly:

“IF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.”

As an aside, Trillin’s profile of R.W. Apple Jr. is one of the finest examples of profile writing.  Right up there with “Frank Sinatra Has a Cold,” in my humble opinion. [via]

Last week, Lamar Odom and Khloe Kardashian laid off my best friends. They were model employees of Comcast/E! Entertainment and now because Keeping Up With the Kardashians decided it was of the utmost artistic integrity to stage a television “wedding” some of the best people I know are looking for work.

The price for the lavish “wedding” was rumored to be a cool one million dollars — chump change to Odom who just signed a $33 million contract with the Lakers. Pocket cash for Bruce Jenner, a motivational speaker and hero of the 1976 Olympics. A sliver of Khloe’s inheritance money, better known as the Orenthal James Simpson defense fund.

You get the point. These were wealthy people and still they twisted E! Entertainment’s arm, probably not too hard, to pay for the wedding.

The company made a conscious decision to hold a fake non-binding (maybe it was real, I don’t know) wedding and then coincidently hold layoffs a few days afterwards. A total of 36 people were let go just after that magical ceremony. I’m not sure if there was a direct correlation, but I’m assuming all of their yearly incomes add up to just about a million dollars. At the very least a few jobs could have been saved by passing on the charade.

What kind of company can make such a cavalier decision?   MORE »

It is at an all-time high.  Surpassing levels reached during the 1930’s depression.

Though income inequality has been growing for some time, the paper paints a stark, disturbing portrait of wealth distribution in America. Saez calculates that in 2007 the top .01 percent of American earners took home 6 percent of total U.S. wages, a figure that has nearly doubled since 2000.

As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that’s “higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the ‘roaring” 1920s.’”

Maybe Obama should concentrate of rebuilding the middle class and bringing up the lower classes and then worry about health care reform.

In case you’re wondering at home, when all the whining is going to end, about who’s “responsible” for the absurdly high trilllion dollar deficit in Washington — here’s a pretty good answer.

I warn you though, it’s not a pretty picture.  It’s not even a trainwreck you can’t look away from.  This is like staring into the dark abyss of the Elephant Man’s soul. 

“The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.

That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade. “

Evert Cilliers over at 3QuarksDaily examines the deficiencies of capitalism in the modern world and how it can be improved.

The fact is that capitalism is a feudal system, which therefore works well in a feudal society like China.

But in modern, highly evolved democracies, capitalism is a handicap.

Why? Democracy has evolved, but capitalism hasn’t. It’s essentially unchanged from its 18th century origins. Capitalism is so feudal, it’s almost medieval. It requires a subservience from its minions that hints at slavery, serfdom, or peonage. It grants its captains of industry the freedom to lord it over everyone else like banana-republic dictators or command-economy Kremlin bosses.

Freakonomics looks, ever so slightly, at the price of marriage.  It’s decrease with the dismissal of syphallitic blood tests have led to a 6% increase in marriages since 1980.  

And yet, it’s no secret that divorce rates are up (due to any number of factors but mostly to the lack of stigma surrounding divorce now).  Although, they aren’t nearly as bad as people make them out to be.  

“A very neat new study allows one to use the differential timing of the repeal of blood-test laws to infer what the demand curve for marriage licenses looks like as the implied price decreases,” writes Daniel Hamermesh.  He surmises that increasing the price of a marriage license could lead to less impetuous marriages — the kind that will ultimately lead to broken homes, unhappy coules, divorces, or unwanted children.  

But then he also rationalizes that the unintended consequence of raising the price of a marriage license could be an increase in the out-of-wedlock birth rates.  Sound the alarm!  Except that we know those birth rates have already been increasing significantly in America and so there would seem to be no correlation between the two.  

Here, raising the price of a marriage license (and to a degree allowing everyone to get married or abolishing the government from being in the “marriage” racket) isn’t a terrible idea if it keeps people from jumping into a marriage that won’t last.  

It’s a serious decision that requires serious thought and shouldn’t be taken lightly.  

Now, if someone can just do something about the actual costs of marriage ceremonies.  That’s getting absurd.  

Also?  Bouncy castles at weddings — thumbs up or thumbs down?

For these uncertain times, people need something to turn to for hope.  It’s not Obama, as it turns out.

In “Praying for Recession: The Business Cycle and Protestant Religiosity in the United States,” David Beckworth, an assistant professor of economics at Texas State University, looked at long-established trend lines showing the growth of evangelical congregations and the decline of mainline churches and found a more telling detail: During each recession cycle between 1968 and 2004, the rate of growth in evangelical churches jumped by 50 percent. By comparison, mainline Protestant churches continued their decline during recessions, though a bit more slowly.

It’s odd that the correlation is between evangelical congregations, as opposed to say, any old religious church.  And I wonder if there are any other factors leading to this relationship.

Here is the full story.  Here is the paper.  Here is earlier discussion from Mark Thoma’s.  Here is David Beckworth’s blog.  [via]

As Clusterflock points out cigarettes often become currency, which is not surprising.  What is surprising is how developed the economic structure of a prison camp can become.  It acts as a microcosm for society at large with people occupying niches, many things are purchased on credit, stores were opened.

The permanent camps in Germany saw the highest level of commercial organization. In addition to the Exchange and Mart notice boards, a shop was organized as a public utility, controlled by representatives of the Senior British Officer, on a no profit basis. People left their surplus clothing, toilet requisites and food there until they were sold at a fixed price in cigarettes. Only sales in cigarettes were accepted – there was no barter – and there was no higgling. For food at least there were standard prices: clothing is less homogeneous and the price was decided around a norm by the seller and the shop manager in agreement; shirts would average say 80, ranging from 60 to 120 according to quality and age. Of food, the shop carried small stocks for convenience; the capital was provided by a loan from the bulk store of Red Cross cigarettes and repaid by a small commission taken on the first transactions. Thus the cigarette attained its fullest currency status, and the market was almost completely unified.

There are price fixing scandals and alternate currencies besides cigarettes, there were middlemen and shortages.  It seems as if this type of prisoner camp portrayal would be infinitely more interesting – the camp as a living, breathing economical organism – than how it is categorically portrayed in the movies.  The prisoner camp is a character in and of itself.

But, according to the Dallas Morning News, because of eroding economic conditions in the states, more illegal immigrants are crossing the border back into Mexico.� Which, I suppose, is one way to handle the illegal immigrant problem – just create economic conditions poor enough to make them want to go back home.

Well played President Bush, well played.

Two hours were enough for Jos� Luis S�nchez and his family to pack their most valuable belongings in two vans � items accumulated in 10 years of living in the Dallas area.

With his wife, children and their suitcases in place, Mr. S�nchez closed the door of his Mesquite apartment for the last time, sat at the wheel of one of the vehicles � his brother drove the other � and hit the road back to his homeland.

So ended his decade-long adventure as an illegal Mexican immigrant in the United States.

According to Mexican consulate officials in Dallas, some 400 immigrant families have told them so far this year that they’re going back to Mexico and asked for transfer documents to enroll their children in Mexican schools.

Enrique Hubbard Urrea, Mexican consul general in Dallas, said it is impossible to track every Mexican who leaves the area. But he said the number asking for transfer documents at the consulate is on the rise.

In 2005, the consulate issued 162 such documents; in 2006 it was 199; and last year it was 270. At the current rate, more than twice as many people will leave this year as last, he said.

“There is no doubt the trend indicates that the number is growing,” Mr. Hubbard said.

This isn’t just happening along the Texas border, however.� It’s happening in places such as Chicago and Phoenix.� I’d make a joke but this is just sorta sad.� Where do we, as a country, go from here when we aren’t even good enough for our illegal immigrants?� That’s not supposed to be funny, though it is sort of a laugh or I’d cry kind of situation.