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Robert Sherman
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When the dollar is strong U.S. energy prices decrease making the production costs of American made goods much lower. Your analysis doesn't seem to take this into account. Foreign energy prices do not decrease as much because many foreign governments artificially control their own energy costs.
The ten to fifteen year housing boom led many to enter construction trades as virtually unskilled contractors instead of pursuing technical or academic education and acquiring skills for life. What we're seeing is the result - chronic long term unemployment. It's much like what happened during the "Rust Belt" era in the Midwest. Those affected will either get skills or subsist on a myriad of liberal welfare programs - disability, food stamps, housing assistance, extended unemployment, Medicaid. Unfortunately for them, the middle class will tire of the tax burden and vote for a cut back. It would be better if the regional Federal Reserve Banks warned of the need to get skills before it is too late for the comfortably poor.
With record low interest rates, credit card interest still remains high. Since the current Administration in DC will no doubt be engulfed with lawyers fees defending themselves, the law should be put back to where it was.
For those of you who are too young to remember the 1970s it was horrible. Wage and price controls meant that wages basically stayed flat and prices went up. You had to switch employers to get ahead financially. If you worked hard, get an education and adapted to changing conditions, you could succeed. Church and family reinforced those values. Whole areas of the country adapted and changed, e.g. the rust belt. The flat line of employment to population today should be a major concern. While the baby boomers are retiring, they are being replaced by the millenial generation of even greater numbers. In the 1970s it took eight to ten years to figure out that government was not the answer to the economy's problems. We're six years and counting now of government supplying failed solutions. Let's hope we wake up soon.
The median amount outstanding of $12,800 is less than the cost of a new subcompact car. The big difference is that the proved differences in lifetime earnings from greater education far outweigh the loan amount. It's a strange society when researchers at the Federal Reserve Bank of New York seem to be concerned that people are going into debt to learn and advance our society. The unemployment rate of college graduates is around 5%. It would be far better for the same researchers to focus their energy on why our elementary, middle and high schools are not preparing more people for college and advanced technical schools.
Toggle Commented Mar 6, 2012 on Grading Student Loans at Liberty Street Economics
Sadly our school systems do such a horrible job the Fed seems to think it needs to use comics to fill the void. Hopefully the era of government thinking people are idiots will soon pass. Parents need to take economic, civics and American history education into their own hands and find good schools in or out of the public system.
At least in New York City, the school system's focus seems to be anything but student performance. Until that changes at the administrative and teacher reward level, very little is likely to change. The political establishment from the Governor, legislature, Mayor of New York, and City Council have yet to effect meaningful change. Parents are on their own when it comes to securing good educational outcomes for their children.
Didn't the participation rate also hit new lows during the 1970-mid 1990 period until we had welfare reform? For the last ten years, welfare has come storming back even easier than in the past. Only now it's done by completing tax returns. With the IRS it's virtually no verification. We need to stop rewarding winners and losers in the personal and corporate world via the tax code and flaten it out. You get baby sitting credits, 'earned' income credits,stimulus credits, etc. Small wonder fewer people are bothering to look for work. Has anyone audited the BLS and Commerce Census staff, methodology and reports to ensure the integrity of the data? Once upon a time it was felt to have been politicized. Perhaps that time has returned. If I were in charge at those bureaus, I would ask for audits to ensure the integrity of the results.
So why is the President and Fed burning through so many taxpayer dollars bailing them out? This if the dumbest the govt has ever been.
The New York Fed deserves some credit for posting articles for comment, reading the comments and responding to them in a thoughtful manner. This is something sadly lacking in the White House, Treasury and the Congressional Budget Office.
"The Great Moderation" from 1986 to 1996? Are you serious? Did you not read about the 1987 Crash, the Dot Com Boom, Long Term Capital Management? The only ones who did not see the recession coming were the economists and policy makers at the NY and DC Fed offices and their counterparts in Treasury and the now inept Congressional Budget Office. All the policy makers did was put off a real recession by replacing one bubble with another. Those of us economists in the business world who actually think through developments were well aware that real estate prices were too good to be true. Crash! They were. But the policy makers have kept the air in the bubble by injecting one false start after another instead of letting the market settle. What a horrible disservice. Try some rational thinking out for a change. Perhaps you'll understand then why many of us prefer flat rates and an end to crony capitalism and state sponsored socialism.
People experiencing high gas prices will expect them to continue until a direction change is reported in the commodity markets. Unfortunately, policy makers have done little to address these rational expectations. It will also lead to an expectation of much higher heating oil prices this winter. Should that materialize, consumers in early primary states like New Hampshire will convey their sentiments at the ballot box.
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Apr 18, 2011