Crowding out in financial aid

Article on how increased financial aid from government crowds out private aid and also raises tuition, with references.

Here.

JP Morgan Chase discusses cost structure vs regulation

Check this out: some numbers for profitability by customer. Very interesting.

Some serious food for thought on the NASA plate

Check out this article about the host of the updated Cosmos series and his views on the value of space exploration and the implausibility of privatization's success.

Federal aid drives up tuition for everyone? No way!

SmartMoney has a report today about several studies that find that Pell Grants, etc. drive up the cost of tuition for everyone. Which is exactly the economic outcome you'd expect, similar to Freddie and Fannie's subsidies of subprime lending and securitizations driving up the cost of housing in some otherwise undistinguished markets.

It seems that bubbles driven by federal spending are all the rage. I read yesterday that a GE unit was requiring their folks to drive Chevy Volts instead of real cars. I wonder when that deal was cut. From Google, it looks like it was cut way back in 2010.

I wonder if government involvement in rescues of GM and Chrysler have artificially inflated salaries of line workers there? That's another question that should be asked I guess. We certainly didn't see that effect on Wall Street, where layoff after layoff has occurred in the last three years.

Trouble in DC

It appears that 2012 is a watershed year for violent crime in the nation's capital (note that we have to distinguish violent crime from good old fashioned crime, which goes on every time Congress is in session. But I digress...)

The best part of the article is this quote

“People are beginning to not feel safe,” Ms. Cheh, Ward 3 Democrat, said last week after a news conference at 2nd District headquarters to discuss the increase in robberies.

Bwah-hahaha. Lady, people have felt "not safe" since I can remember in most of DC, that's the problem. Wow.

If you wonder how the recent court ruling regarding individual ownership of guns is working out, you can read all about it starting here, although it gets really fun about here. Turns out there's only one source for guns in DC (approved guns, that is). The journalist reviews her steps to ownership (legal ownership) here.

No wonder violent crime abounds there.

Long-term unemployment is now a disability

I've heard rumors of this in the past few years, but this is the first I've seen it in print that I recall. Turns out that folks are rolling off of the unemployment rolls and into the arms of Social Security disability.

It certainly sounds like a short-term political solution to a long-term economic problem.

John Stossel on the deficit: Common sense isn't common

I remember growing up when Stossel was the consumer reporter for ABC's 20/20. I was always amazed at how he and Hugh Downs put up with Babba WaWa - they never even flinched.

Stossel has a piece on his show blog, a promo for his show, that discusses the current federal debt and deficit in responsible, easy-to-understand terms (which, as we all know, is important).

Imagine this situation (from his numbers):

Family Budget

Income $24,700

Expenses $37,900

New Credit Card Debt $13,300

Existing Credit Card Debt $153,500

Recent belt-tightening $385

Add 8 zeros to the end of these figures and you have the national situation.

This is what's wrong, folks. To follow up from yesterday, we're spending a whole lot more than we're taking in. Something's got to change fundamentally in this country, and it probably doesn't involve the government getting BIGGER.

Before I get any comments asking "What do you MEAN? You're suggesting that (Group X or Y) must feel the pain because they take the most from government spending!" Nope, I'm just pointing out that we're approaching a tipping point on taxes - those of us who earn and pay taxes are less and less able to keep up with the folks who don't earn and don't pay net taxes. And if productivity tanks, we're all in trouble again.

As I mentioned yesterday, the excess purchasing power to repay the gov'mint debt must come from somewhere, and must be taken from someone. It's who gets "taken" that's important.

Here's another Stossel piece along the same lines. "The Road to Bankruptcy" echos the title of Hayek's book "The Road to Serfdom."

Finally, a link to a story about the Food Police, where the actual food police are not identified - they took a 4-year-old girl's lunch away (the lunch Mommy made for her) and made her eat (and pay for) chicken nuggets. Be afraid, be very afraid...

Meanwhile, the deficit continues to grow

Meanwhile, back at the ranch, as they used to say in the Saturday morning Western serials, the deficit continues to be ignored by Corporate Media. The Wall Street Journal has a wonderful opinion piece discussing just that here.

The problem seems to be pretty simple: federal taxes bring in approximately 16% of GDP every year, and the federal government seems to spend about 24% of GDP every year (and it's increasing over time, while tax receipts are decreasing over time - I refuse to call them "tax revenues," as that sounds wildly inaccurate). So we have a "structural" problem, obviously. Either taxes have to go up more and more, and soon, or spending has to go down more and more, and soon.

You can bet which one I'm voting for.

When you factor in the huge number of folks in this country who pay no taxes, or even NEGATIVE taxes, that means that repayment of the existing national debt, as well as the repayment of the FUTURE national debt, falls on fewer and fewer people every year. It's hard to see how this turns out good for those folks who pay taxes.

We're always hearing how the national debt ($15.3 Trillion in total) is something like $40k+ for each citizen in the country. That's misleading - when we look at that number for each taxpayer that's currently funding the government, it goes up to something like $140k each. That's a liability that's in addition to their credit cards and mortgage and their retirement savings and sending the kids to college, etc. Where does the purchasing power come from to do all of our personal things and THEN pay off the government debt over the next generations? I can't see it.

There's no doubt that quality of life is going to have to equalize some of this disparity, and it's hard to see how this trend will reverse or reduce in the short-term. One thing seems clear, however; regardless of your political persuasion, those budget numbers don't work.

I may not have made the case as well as I could, here, but those numbers aren't all that complicated. And there's only so much help that "growth" can give.

Administration pushes for higher taxes on the "rich"

I guess "rich" means different things to different people, but the Wall Street Journal has a story about how the new budget means new recommended tax rates on things at the federal level.

Let's see: politicians tax smoking because that reduces smoking, and they tax drinking because that reduces drinking.

How does that logic fit with taxing capital gains (or, for that matter, taxing individual estates)? Does that mean that we WANT investment to go down, as represented by the ever-present effort to increase taxes on those of us who try to invest?