Tuesday, June 29, 2010

Does the truth make a difference?

I'm reading a political book recommended by a friend. The book describes several candidates for president as they worked their way up to the 2008 election. I was thinking that one (or more) of the candidates lied about so many things and would say anything to get elected.

Then it hit me, that most (all?) candidates lie and will say anything to get elected. So, my question is, does the truth make a difference? If all candidates lie, which lies do we believe? Or do we just discount it all?

I'm interested in your opinion.

Friday, June 25, 2010

A New Day for Consumers?

That's what the NY Times headline says in this article. And I'm sure we'll hear that from a lot of politicians, how they have saved the consumer from so much grief from the big-bad banks. You see, congress has passed a new law (well, details are still being ironed out between the House and Senate) legislating how banks can act on your behalf. But I find interesting the details of the new law.

The NY Times lays out several areas of "change" in the new bill. It shows how a new Consumer Bureau has been created with the Federal Reserve that "would write and enforce rules for most banks, mortgage lenders, credit-card and private student loan companies." Well, I'm glad a new agency was created so that more government money can be spent (hopefully the sarcasm in that comment comes through - the Federal Reserve has been doing this for years).

But the new law goes further, in allowing the consumer to get his/her credit score for FREE! Yes, the guys singing the free credit report song have been upheld by the government. Well sorta. You see, you always could get your credit report for free (3 per year). And the only way you can get your score with this new law is if you apply for credit and were harmed by your score. The NY Times points out that "nothing is stopping you from asking for the score, even if you like the rate or result of your application." Actually, that's always been true. The last time I applied for a loan (car loan circa 2004) I asked to see my credit report and score. I sat down with the loan agent and went through it line by line. (I told them I wouldn't buy the car unless they did).

Mortgages will be changed (or not) by the new law. Mortgage companies will now have to verify your actual income. The article accurately points out that "most lenders have learned that lesson by now or have ceased to exist. Prepayment penalties will now be illegal on certain types of loans. Seems to me that with a little education, consumers would have eliminated these previously. Simple rule - don't accept loans with prepayment penalties. Isn't HUD supposed to do some education like this?

There are a few more items in the bill being worked on, but when you get down to the details, they really don't do much either. This is a lot like the much-bally-hooed CARD act of 2009 (see my comments here) that "changed" the way credit cards were managed. When you look at the details of that law, you'll find it was much softer that the changes the Federal Reserve had ALREADY ENACTED. It just gave more time to the credit card companies.

You'll hear a lot about this new bill in the coming weeks and months. I suspect you'll hear a lot about it during the upcoming election cycle. But remember, we would all be better if congress stayed out of it, and made the appropriate EXISTING agencies do their job.

Your comments are welcome.

Monday, June 21, 2010

The High Cost of Higher Education - part 2

One of my readers mentioned that her employer requires a 4 year degree for a job as a network or server administrator. But, as she explained, this isn't even taught in a 4 year program, and it is covered in a 2 year program.

This brings up my second point. Before I started this series of posts, I came to the conclusion that there's a difference between a college education and a degree. I spoke to someone who mentioned that she had heard someone say that a college degree today is like a high school degree was a few years ago. Many jobs just aren't available to those that don't have a college degree. Employers want you to have that piece of paper.

So based on these discussions, one of the reasons you might need a four year degree is simply for the piece of paper. If this is your reason for going to college, wouldn't it make sense to get that piece of paper for as low a cost as possible?

I'm not suggesting that this is the only reason for getting a four year degree is the piece of paper. There is significant benefit to the college experience. Living in a dorm and learning to balance the freedoms life gives has some value. Only the individual can assess that value.

There is also value in education. I went back to school many years after I got my bachelor's degree and have not received a single dime more income as a result. I received a lot of value for the education, but not sure that the valuable is measurable.

In summary, I've identified three different reasons for college: 1) Simply for the paper - to impress would-be employers, 2) for the life experience, and 3) for education. I'll look into more issues on the cost of higher education in the next couple of posts.

Wednesday, June 16, 2010

The High Cost of Higher Education

"Carmen Gardiner, 25, a 2007 graduate of Louisiana State University, is weighed down by her private student loans. Her debt is now about $80,000... Gardiner's undergraduate degree is in psychology. She lives with her husband, who is still in college, and earns $13 an hour at a call center in Atlanta." (USA Today)

Carmen's income level comes out to about $26k/year. If she took 100% of her pay after social security and assuming a small tax, it would take almost four years for her to pay off her student loan. In reality, she probably can never pay it off at her income level or at best it will take a substantial portion of her income for several years. What went wrong? Wasn't getting a college degree good?

Today's job market demands higher education, but education costs keep going higher. What's a person to do? Take out $80,000 (or more) in student loans and get a job that pays $13/hour or skip college and go right into one of those under $10/hour jobs? Is it time for a student bail-out?

Over the next few days, I will explore some of the issues related to higher education. Your input is welcome and may help guide the posts that I make.

Monday, June 14, 2010

Oil spill - Obama's Katrina or Obama's 9/11?

Unless you've lived in a cave the last several weeks, you've heard all about the oil spill in the Gulf of Mexico. You know that BP is in charge and that President Obama's mad.

Reports on how much oil is spilling depends on who you ask. I'm thinking about going down to Louisiana and making up a number myself so I can get on the news. But this article puts the spill at between 1 and 2 million barrels or 42 to 84 million gallons of oil.

Reports also keep reminding us that this oil spill is the worst in US History. However, what they don't tell you is that it is the 4th or 10th worst spill in world history (depending on whether you believe it's 1 million barrels or 2 million barrels). The source for that number is here.

I'm not trying to minimize the effects of the spill. It's a mess and it's still going. It will have to be cleaned up and the environmental and economic impact are going to be tremendous. But the question I want to address is - is this event Obama's Katrina or 9/11?

First let's remember that Katrina was a natural disaster and 9/11 was a terrorist act. The comparison to Katrina is more about the president's response. The only way I can understand the comparison to 9/11 is to look at America's response - anger.

Unlike some of my counterparts, I don't fault President Obama for his early-on lack of attention to the issue. This doesn't seem like a problem the federal government is equipped - or should be equipped - to handle. It is a matter for private business. Certainly BP needs to go to court for any criminal and civil statutes that apply. I'm hoping that congress doesn't get silly and try to pass some retroactive laws to punish BP after-the-fact.

I also don't see the comparison to 9/11 being anger. Anger doesn't help us solve the problem and removes a lot of objectivity to the problem. I for one hope that all Americans, especially the president, will cool their anger, resist kicking someone's derriere and work towards a common solution. Once the spill is stopped and the cleanup can be sized, then it's time to take a look at the legalities.

There's been a lot of talk about the penalties that BP should face on this matter. But before we look at that, let's look at who gets penalized. Since BP is a publicly traded company, you can go to this site and see who owns stock. (as a disclaimer - this only covers shares in the American Depository, I'm not sure how to find foreign shares).

A quick glance of majority holders shows that Bank of America and Wells Fargo are near the top. These are two popular targets for other reasons, but it also means that every person with an account at either of these banks has some stake in BP's success or failure. Same goes for anyone who has an IRA/401K with T. Rowe Price, Morgan Stanley, Vanguard, Fidelity and some other well known mutual funds.

But wait, there's one name on the list that surprised me. It seems that the Bill & Melinda Gates Foundation owns a little over 7 MILLION shares. I thought they were into green energy? I guess they have all the loyalty of former VP Gore when it comes to doing what they say.

So punishing BP is going to punish a lot of people you & I know. Yes, they need to clean up the mess and to some degree, they need to compensate people whose jobs are impacted. But jobs come and jobs go, the people who are missing out on work have an obligation to look for new jobs. Several of my co-workers have lost jobs in the last few years, and it wasn't due to an oil spill.

Some are using this as an excuse to stop drilling. I'm not changing my perception. We need to drill. We need to look at solar, wind and any other kind of energy we can get. But it shouldn't be a federal responsibility. Private companies should (and are) look for alternatives. While we continue to use the energy we know about and have been given.

Lastly, we as Americans, need to watch this carefully. I'm firmly convinced that if BP was an American company, this administration would have already taken steps to nationalize it or give it to the unions (ala GM). Our country has been the preferred safe haven for foreign investments because (traditionally) we don't do that. Companies stand or fall on their own merits. The current administration has meddled too much for my comfort and I suspect foreign investors are watching carefully.

Sunday, June 13, 2010

Baptism - Part 2

Yesterday, I restarted posting to my blog. It's been a long hiatus and I wasn't sure if I wanted to start back or not. But, I did and when I posted yesterday, I read my last posting. It was about baptism.

Well, I certainly didn't think about today's events when I re-started my blog. But, maybe there was something going on in my subconscious or maybe Someone was planning something.

Regardless, today was another baptism, but not at my church. Today, my son-in-law was baptized at a nearby state park in the lake. I've seen lake baptisms before and I think they are neat. Nothing wrong with a nice clean pool, but a lake works too.

As I said before, I believe baptism is a symbol, a sign of some previous action. Today's was neat because we had most of the family around to watch and to support Michael. The pastor pointed out that this doesn't mean he has it all together, but that he's working on it.

I like the way this was done today.

Saturday, June 12, 2010

I'll gladly pay you Tuesday for a hamburger today

I saw an article online and it made me think of this old line. It was my father-in-law's favorite.

The article deals with NY state and municipalities and their payments to the state pension fund. Seems they are having problems coming up with the $$, so they're going to borrow the money for the payments - get this - from the pension fund. The money borrowed will have to be paid in 2013.

Wouldn't it be easier just to stick an IOU into the offering plate? Why not looking at cutting payouts - at least temporarily?

I guess it's good I don't live in New York. Full story at -> http://www.nytimes.com/2010/06/12/nyregion/12pension.html?partner=rss&emc=rss