The Federal Government’s entry into the Student Loan Market eliminates Market Forces

Posted by PITHOCRATES - September 7th, 2013

Week in Review

A sound banking system is a requirement for any advanced economy.  Because you need capital to make an advanced economy.  And how do you do that?  By people responsibly saving for their retirement.  Putting away a few dollars of every paycheck.  A small amount of money that can’t buy much of anything.  But when hundreds of thousands of people save a few dollars from every paycheck those small amounts become capital.  Large sums of money banks can lend out to investors who want to build factories.  Responsible bankers loaned their customers’ deposits to investors.  Investors paid the bankers interest on these loans.  And the bankers paid interest to their depositors.  The economy grew.  And people saved for their retirement.  The system worked well.  And grew the US economy into the world’s number one economy.  But now we’re in danger of dropping from that number one spot.  Because the government destroyed our banking system (see Exclusive – JPMorgan to stop making student loans by Reuters posted 9/5/2013 on Yahoo! Finance).

JPMorgan Chase & Co (NYS:JPM) will stop making student loans in October, according to a document reviewed by Reuters on Thursday, after the biggest U.S. bank concluded that competition from federal government programs limits its ability to expand the business.

When the government runs a deficit they sell bonds to finance it.  Pulling capital out of the private sector.  Raising borrowing costs.  The government then tries to lower borrowing costs by printing money.  Expanding the money supply.  And by making more money available to lend interest rates fall.  But it also does something else.  It encourages bad investments.  Malinvestments.  People who look at those artificially low interest rates and think they should borrow money when the borrowing is good.  Even when they don’t have a good investment opportunity.

They may expand their business now because money is cheap now.  Even though they don’t really need the additional capacity now.  And then if the government raises interest rates to cool the overheated economy thanks to those artificially low interest rates these same investors see their revenues fall as they took on additional expenses by expanding their business.  Just because interest rates were low.  Now their costs are higher just when their revenues have fallen.  Pushing the business towards bankruptcy.  Which would never have happened if the government didn’t encourage them to borrow money they didn’t need by keeping interest rates artificially low.

But getting people to borrow money when they don’t need it is the government’s only economic policy.  Which they took to another level in the housing market.  With pressure from the Clinton Justice Department on lenders to qualify the unqualified for loans.  Exploding the use of risky subprime lending.  And then using Fannie Mae and Freddie Mac to buy these risky subprime loans from these lenders.  Removing all risks from these lenders and passing them on to the taxpayers.  To encourage these lenders to lower their lending standards.  So they would keep making risky loans.  Which they were more than willing to do if they incurred no risk in making these loans.  Which Fannie Mae and Freddie Mac did for them.  Thus further destroying the banking system.

And now the government has taken over student loans.  Where they will do to student loans what they did to home mortgages.  Where lending decisions will be made for political reasons instead of objective lending standards.  Guaranteeing more subprime mortgage crises in the future.  A further destruction of the banking system.  And the destruction of one of the pillars of an advanced economy.

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Kids are Smoking about as much Pot as Grandma and Grandpa are Smoking

Posted by PITHOCRATES - September 7th, 2013

Week in Review

The Sixties gave us hippies and free love.  And the Seventies gave us stoners in junior high school.  Growing up apparently hasn’t changed much for these stoners (see Drug Use Drops for America’s Youth, Rises in the Over 50 Crowd by MIKE LEVINE, ABC News, posted 9/4/2013 on Yahoo! News).

Drug use among America’s youth is dropping, but it’s booming among people over 50, a U.S. government survey released Wednesday shows.

Last year, the rate of illicit drug use among children and teenagers 12 to 17 years old dropped to 9.5 percent, down from 11.6 percent a decade earlier, according to the Substance Abuse and Mental Health Services Administration’s (SAMHSA) latest national survey.

Meanwhile, illicit drug use among adults 50 to 64 years old has increased in the past decade.

Specifically, illicit drug use among adults 50 to 54 has more than doubled since 2002, reaching 7.2 percent last year. For people 55 to 59, such drug use has more than tripled, reaching 6.6 percent last year.

Marijuana is by far the most-used illicit drug among both children and adults, according to SAMHSA, a division of the Department of Health and Human Services.

At a press conference Wednesday in Washington, officials expressed particular concern about use by those 12 to 17 years old.

“There’s no question that marijuana is harmful to the developing brains of adolescents,” said SAMHSA administrator Pamela Hyde, adding that marijuana use has been linked to “significant I.Q. declines.”

So what were these 50-54 year-olds doing when they were 15 (the average of 12 and 17)?  It was the middle of the Seventies.  The height of Cheech and Chong and stoner humor.  Anyone in school in the Seventies knew what 15 year-olds were doing.  Getting high.  Some kids just reeked of marijuana in school.  Some would smoke a joint before school.  Some would cut class and get high.  Much of junior high is a foggy memory to them today.  Having fried a considerable amount of brain cells in those days.

Kids today still smoke more pot than Grandma and Grandpa.  Unless their Grandparents were getting high in the Seventies.  Here’s a test you can do to find out.  Knock on the door and whisper, “It’s Dave.”  If they say, “Who?”  Whisper louder, “Dave!”  If they then reply, “Dave’s not here” and begin laughing you know they were listening to Cheech and Chong in the Seventies.  And probably spent their spare time getting high.  Which is why they are still getting high.  Once a stoner always a stoner.

Which does not bode well for today’s youth.  About 10% of 12-17 year olds are smoking pot.  And that’s with it being illegal.  Imagine what it will be like when more states decriminalize it.  And this isn’t Grandma’s and Grandpa’s pot.  Pot today is far more potent than it was in their day.  And will cause more long-lasting damage.   So they probably won’t even remember why “Dave not’s here” is funny when they reach the ripe old age of 50.

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Climate Scientists prove Weird Weather is Due to Manmade Global warming with Assumptions and Computer Models

Posted by PITHOCRATES - September 7th, 2013

Week in Review

Every night during the weather report I watch they show the high and low temperatures as well as the average and record for each.  And even though we are supposedly suffering the ravages of global warming those record high temperatures often reach back a long time well beyond the Nineties when talking about global warming became all the rage.  After the coming ice age became so yesterday’s apocalypse.  Some of these records go back close to a century.  So this being so hot is not a new phenomenon.  As it’s been really hot before.

In fact, it was once so hot for so long that it pushed back the glaciers from near the equator back to the poles.  Where they are now.  Now that’s some global warming.  And that was from 850 to 630 million years ago.  During the Cryogenian period.  Which was before Henry Ford mass-produced the automobile.  Before John D. Rockefeller made gasoline cheap and plentiful.  Before James Watt improved the steam engine and gave us the Industrial Revolution.  Before Abraham left Ur for Canaan (if you’re religiously inclined).  Before man began using stone tools.  Even before the human and chimpanzee lineages split (if you’re evolutionarily inclined).  Putting the greatest period of global warming (based on the melting of glaciers) long before any manmade global warming existed.  Yet the leading climate ‘scientists’ tell us manmade global warming is causing climate change like never seen before (see Study finds global warming raised likelihood of about half of last year’s weirdest weather by The Associated Press posted 9/5/2013 on CP24).

A study of a dozen of 2012’s wildest weather events found that man-made global warming increased the likelihood of about half of them, including Superstorm Sandy’s devastating surge and shrinking Arctic sea ice.

The other half — including a record wet British summer and the U.S. drought last year — simply reflected the random freakiness of weather, researchers with the U.S. National Oceanic and Atmospheric Administration and the British meteorological office concluded in a report issued Thursday.

The scientists conducted thousands of runs of different computer simulations that looked at various factors, such as moisture in the air, atmospheric flow, and sea temperature and level.

The approach represents an evolution in the field. Scientists used to say that individual weather events — a specific hurricane or flood, for example — cannot be attributed to climate change. But recently, researchers have used computer simulations to look at extreme events in a more nuanced way and measure the influence of climate change on their likelihood and magnitude…

All 12 events — chosen in part because of their location and the effect they had on society — would have happened anyway, but their magnitude and likelihood were boosted in some cases by global warming, the researchers said…

The different authors of the 21 chapters used differing techniques to look at climate change connections, and in some instances came to conflicting and confusing conclusions…

Thomas Karl, director of NOAA’s National Climatic Data Center, said the study provides “compelling evidence that human-caused change was a factor contributing to the extreme events.”

Have you ever seen the classic movie Office Space?  A movie that makes fun of the corporate workplace?  In it some hardworking computer programmers lose their jobs thanks to some efficiency consultants.  So they come up with a plan to slowly steal from the company.  By modifying the code used in the finance department.  Whenever they rounded off any financial transaction any amount that was less than a penny would drop into a bank account they set up.  The corporation would never see these fractions of a penny disappearing from the books.  And when these guys approached retirement these fractions of a penny will have added up by that time to help make their retirement more comfortable.  With the added bonus of knowing that they got back at the company that so cruelly got rid of them.  A brilliant plan.  But checking the bank account shortly after putting their plan into action instead of a penny or two in that account there was over $300,000.  A number so large that the company could not NOT notice it missing.  And indeed did notice it missing.  What happened?  The guy that wrote the program put a decimal point in the wrong place.  A mistake he said he always makes.

Funny.  But believable.  For who hasn’t made a decimal point error in their life?  Especially computer programmers.  Who create very complex computer models.  That crunch an enormous amount of data.  People have spent hours trying to debug an Excel spreadsheet that isn’t working correctly.  Imagine trying to debug a complex computer program that models climate.  Where there are no ‘right’ answers.  Just a bunch of ‘what-ifs’ programmed with ‘nuance’ to produce the results they want to see.  This is what passes for science in the global warming community.  Which is more wishful thinking than science.

I have a friend who deals with construction contractors.  And he always hated dealing with the controls contractors when their stuff didn’t work.  Delaying project completion.  Because he was at their mercy.  No one but they knew what was happening inside their programs.  And these people would blame anything and everything but their programming.  To avoid getting hit with costly liquidated damages.  So they had to spin their wheels eliminating all those other possibilities.  Until all of a sudden things started to work correctly.  No one could explain what had happened.  Why things just started to work.  But my friend thought the controls contractor just finally debugged their program to make it work correctly.  But he couldn’t prove it.  No one could.  For what happened inside that box that held their program might as well have been magic.   It was just indecipherable to anyone who didn’t write it.  I think about this when I hear about these climate models.

No one can possibly know what is going on inside the boxes that contain these climate models.  It is for all intents and purposes magic to the layman.  And probably black magic at that.  Input a thousand variables and the model tells us manmade global warming is destroying the planet.  But between those inputs and that output are a lot of assumptions in the program.  And all of those assumptions and programming are proprietary information.  We’re not allowed to see it.  Or understand it.  No.  We’re just supposed to accept their conclusion.  And change the world we live in because of it.

Greater climate change happened before man ever impacted the environment.  And computer programs can tell you anything you program them to.  While taking a lot of debugging to get them to produce the ‘right’ answer.  As determined by the people looking for a specific result.  This is not science.  This is politics.  On a grand scale.

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Human Rights Violations are Worse in North Korea but Liberals would rather punish Syria for Theirs

Posted by PITHOCRATES - September 7th, 2013

Week in Review

The Syrian civil war began in March of 2011.  And is still ongoing.  Some two and a half years later.  And over 100,000 killed.  While displacing close to 3 million refugees.  It is a devastating conflict.  But President Obama made no attempt to help the opposition topple the Assad government.  Despite it being a close ally of Iran.  No, President Obama did nothing to intervene just as he chose to sit out Iran’s Green Revolution.  Another regime that can be pretty cruel to its people.  Yet President Obama told Hosni Mubarak that he had to leave Egypt.  And he used U.S. airpower to help topple Colonel Gaddafi from power in Libya.  Both men were U.S. allies at the time when President Obama helped unseat them from power.  Yet two countries that can’t be considered friends of the United States in any way (Iran and Syria) he does nothing.  Odd.

The Syrian civil war has been going on for so long that al Qaeda joined in.  Looking to fill that power vacuum should the Assad regime fall.  As the civil war intensified and the opposition begged for foreign aid President Obama stood firm.  Not wishing to get involved.  Unless the Syrians crossed the red line.  And used chemical weapons.  Well, someone used chemical weapons.  We’re not sure who did.  It may well have been the opposition to get the U.S. to bomb a stubborn Assad government out of power.  But people died from the use of chemical weapons.  Perhaps as many as 1,500.  Of which about 500 have been children.  A tragedy too great to even contemplate.  And one that made President Obama go to Congress to get permission to wage war on those responsible.  With many on the left supporting his call for a military response.  Which is highly unusual to say the least.

Now chemical weapons are horrible and frightening.  But an additional 1,500 dead after 100,000 already lost their lives?  Those chemical deaths are only about 1.5% of the total dead.  When Saddam Hussein killed 3,200-5,000 Kurds and Iranians in a Chemical attack on the town of Halabja there wasn’t quite the same response from the left.  In fact, when Saddam Hussein failed to document the destruction of his chemical stock piles per the treaty that ended the Gulf War they still showed little concern.  Though they did vote to give George W. Bush permission to wage war against Iraq as the polls showed they were on the wrong side of the issue when they at first opposed the measure.  Even calling for a second vote to get their vote on the record.  But when no weapons of mass destruction were found they were both embarrassed and elated.  Saying that Bush lied to get the country into war.  Due to flawed intelligence reports.  And a strong desire to go to war.  To finish what his dad started in the Gulf War.  They have attacked Bush mercilessly ever since.  But now the shoe is on the other foot.  And here they are wanting to go to war because of weapons of mass destruction.  Many of which could be from Iraq.  Delivered on trucks seen leaving Iraqi weapons dumps on the eve of war.  Or flown to Syria (see Syria’s Chemical Weapons Came From Saddam’s Iraq posted 7/19/2013 on IBD).

But none of that matters now.  What does is that someone in Syria crossed the red line.  And because innocent men, women and children died from poison gas we have to do something.  Even though we haven’t done a damn thing to help people suffering under worse tyrants for about half a century in North Korea (see Up to 20,000 North Korean prison camp inmates have ‘disappeared’ says human rights group by Julian Ryall posted 9/5/2013 on The Telegraph).

There are fears that up to 20,000 may have been allowed to die of disease or starvation in the run-up to the closure of the camp at the end of last year…

The report, North Korea’s Hidden Gulag: Interpreting Reports of Changes in the Prison Camps, reveals that two camps have been shut down in the last year but that 130,000 individuals are still being held in penal labour colonies across the country.

“Through this vast system of unlawful imprisonment, the North Korean regime isolates, banishes, punishes and executes those suspected of being disloyal to the regime,” the report states.

“They are deemed ‘wrong-thinkers’, ‘wrong-doers’, or those who have acquired ‘wrong-knowledge’ or have engaged in ‘wrong-associations’…”

Reports suggest that a severe food shortage meant that little was passed on to inmates and that numbers dwindled rapidly from 30,000 to 3,000…

“North Korea’s 2009 currency devaluation (whereby camp authorities were reportedly unable to purchase food in markets to supplement the crops grown in the camps), combined with bad harvests, resulted in the death of large numbers of prisoners after 2010,” the report states…

Inmates – who can be imprisoned for life, along with three generations of their families, for anything deemed to be critical of the regime – are forced to survive by eating frogs, rats and picking corn kernels out of animal waste.

Activists say that as many as 40 percent of inmates die of malnutrition, while others succumb to disease, sexual violence, torture, abuse by the guards or are worked to death. Men, women and children are required to work for up to 16 hours a day in dangerous conditions, often in mines or logging camps.

Things are bad in Syria.  But North Korea has just about the poorest record on humans rights in the world.  And this has been going on for decades.  You almost have to go back to Nazi Germany to see oppression on this scale.  But do we attack North Korea?  More women and children have suffered and died in North Korea than they have in Syria.  So why Syria and not North Korea?

North Korea does have nuclear weapons.  And a border with China.  Are these the things that eliminate principles?  Killing women and children is wrong in Syria but it’s okay in North Korea?  Is this all it takes to devalue the lives of women and children?  If so God help the women and children of the Middle East when Iran gets their nuclear weapons.

A lot of liberals hate the military.  And jocks.  As these people bullied a lot of liberals back in high school.  Which is why a lot of them go into government.  To have power over other people that they never had before.  But they’re still that kid in high school.  They’ll push around Egypt and Libya when it seems everyone in the area is against them.  Nations they feel they can bully without any repercussions.  But an Iran or a North Korea?  That’s like walking up to and punching the big bully in high school.  Something they were too frightened to do in High School.  And are still too frightened to do now.

Except in Syria.  Which is now more of a religious conflict along the great Sunni-Shia divide of Islam.  With the extreme elements of both sides fighting it out in Syria.  Perhaps this is why the president and the left are willing to intervene now.  Because whoever wins now in Syria will likely be anti-American.  Just like Libya turned out with four dead Americans in Benghazi.  And just like Egypt fell to the Muslim Brotherhood after President Obama told Hosni Mubarak he had to go.  Perhaps they’ll feel safer because they helped our enemies a little.  And because of that our enemies will now like us.  And they will stop giving us wedgies and noogies.  Figuratively, of course.

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President Obama’s Policies are Destroying the Economy and Transforming the Country in a Bad Way

Posted by PITHOCRATES - September 7th, 2013

Week in Review

Is President Obama the worst president ever?  Perhaps.  Based on what he has done to the economy.  FDR and LBJ caused great damage and destroyed families by putting us on the path President Obama has taken us further down than any other president.  Towards European socialism.  It’s all there in history.  And the economic numbers.  How activist governments destroy everything that made capitalist countries great.  Thrift.  Frugalness.  Working hard to save for your future.  Which created a strong banking system.  Where people deposited their money.  Creating investment capital.  And bankers practiced sound lending practices.  And suffered the consequences of making risky loans.  Unlike today.  Thanks to Keynesian economics.  And a monetary policy that controls and plays with interest rates to create artificial demand that causes great bubbles.  And prolonged recessions.  Ever since governments took control of interest rates and began printing money to finance the growth of their activist governments they have set countries everywhere on the path to financial ruin.  And bankruptcy.  As government spending outgrew the ability of taxes to pay for it.  And then the debt grew so great they struggled to finance it.

But it doesn’t deter the Keynesians from trying the same failed policies of the past.  They continue to intervene into the private sector economy.  And when they cause great economic damage they just report bad economic news as good (see Employment Situation Summary by the Bureau of Labor Statistics posted 9/6/2013).

Total nonfarm payroll employment increased by 169,000 in August, and the unemployment rate was little changed at 7.3 percent, the U.S. Bureau of Labor Statistics reported today.  Employment rose in retail trade and health care but declined in information.

Sounds good.  Things are good.  The economy added new jobs.  Fans of the Obama administration are trumpeting this as good news.  And proof that the Obama economic policies are working.  But if you take a close look at the jobs data you find that the economy is horrible.  Because of President Obama.  And his awful, job-killing economic policies.  Such as Obamacare.  Greater regulatory policies.  And higher taxes.  President Obama has advanced (or tried to advance in the case of cap and trade) every policy that he could think of that causes great harm to the economy.  Is he doing this on purpose because he hates capitalism?  Or is he just another Keynesian who thinks that government is smarter than the people going about their business in the private sector economy?  Or both?

The unemployment rate (the official U-3 rate that counts about the fewest of the actual unemployed) has fallen from a high of 10% since he’s been president.  But it’s not because he’s creating jobs.  It’s because these people just gave up and left the labor force.  Because there are no jobs.  As the falling labor force participation rate clearly shows.

U-3 Unemployment Rate and Labor Force participation Rate Jan 2009- Aug 2013

Ever since President Obama took office the labor force participation rate has steadily declined.  Showing a steady trend of destroying jobs.  Not creating them.  If you want to know exactly how many jobs his policies have destroyed you can get that from the Bureau of Labor Statistics, too.  By subtracting the number of people NOT in the labor force when he took office in January 2009 (80,507,000) from the number of people NOT in the labor force from the August Jobs report (90,473,000).  And when you subtract 80,507,000 from 90,473,000 you get 9,966,000 jobs that President Obama and his economic policies have destroyed.  Just under 10 million people have left the labor force while President Obama has been president.  And yet they celebrate the creation of 169,000 jobs in August.

The economy is not good.  It’s not improving.  It will only improve when we finally abandon the failed Keynesian policies of the past.  And get the government out of the private sector economy. The way it was when America became the number one economic power in the world.  Before the progressives/liberals transformed the country into what it is today.  A dying European social democracy.  Where governments tried to give the people everything.  Only to bankrupt their countries.  And caused their people to riot when they couldn’t borrow enough money to keep giving the people what they had been giving them.  Which is usually what happens when you take stuff away from people who have gotten used to having that stuff.  Which is why Obamacare is so insidious.  And important to the left.  Once they make Obamacare a ‘third-rail’ program like Social Security and Medicare they know it will never go away.  No matter what economic damage it does.  Or how much it destroys the quality of health care.

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