Some thoughts on money and government

This is going to be one of those meandering posts that hopefully makes you think in the end.

First, high five for Milwaukee County Executive Chris Abele! He’s mimicking now Governor Scott Walker’s Kabuki dance with regard to the county budget so well they could be twins. Which is very funny considering how hard the left fought to make Abele their candidate a few years ago.

By the way, if you don’t understand the Kabuki reference, buy that book to your right. :) (Book plugged. I can check that one off the list of things to include in this post.)

2) The student debt bubble popped. We’ve talked about that issue for years here. And remember, Obamacare’s 2,000 page bill included a complete takeover of the loans. You will soon be bailing out those Occupy Mom’s Couch campers with your tax dollars.

3) Forbes has a list of ways out to invest in the Obama economy. It’s worth reviewing.

I for one will spend the evening figuring out which for-profit education stocks to short. (I run the filters, but then have to check it all against a list because of the spouse’s work. It always takes a little longer.)

*Update – Nevermind. I should have done that one back when I first thought about it a couple of years ago!*

Page 119 of the print magazine gives a map indicating state risk. Wisconsin is pink there. Not red, only a handful of states are, but at least not some shade of blue.

The map (which I will dig around and try to embed later) is all about that discussion we had the other day regarding makers and takers. Evidently Forbes has decided that Wisconsin is indeed in better shape the my home state of Oklahoma, which is dark blue.

4) Part of what makes us pink is that often touted fully-funded pension set up we have here. Just remember what a comment told us at FC long ago – that sucker is fully funded with tax paid bonds Doyle put together, not because the unions have been so generous in managing their own retirement. Still, Governor Walker tweeted the good news last week:

That link, which is live, plops you in front of a Wall Street Journal firewall that you can only get behind after you beg your husband for the iPad with the app on it or…he cuts the article out for you from the print version. The article is titled Illinois the ‘Unfixable’ and talks about how the Illinois pension system will soon be melting down. (It never mentions Wisconsin, by the way.)

The Forbes map has Illinois as dark blue. They don’t recommend buying real estate or purchasing bonds from municipalities in that state.

So in hindsight, Governor Doyle and yes, we, the Wisconsin taxpayers, already did some of the heavy lifting to better our situation. Should Act 10 make it through the next court hurdle unscathed, we’ll be in great shape.

Maybe someday Forbes will even let us be red.

5) I’ve been receiving emails here and there about local and county budgets. Yes, your taxes are going up, but not by too much. They can’t as the budget part of the budget repair bill further put the screws to how much communities can raise a levy in proportion to growth.

Hahahahahahahaha. I mean really. It happened while absolutely no one was looking. To have super I-love-Ronald-Reagan-here’s-my-flag-pin conservative Brookfield Mayor Steve Ponto writing a letter to Wisconsin Governor Scott Walker lamenting how he doesn’t have enough money to spend is, pardon the pun, rich.

There’s plenty of money in any of these budgets to pull back. There always has been. What’s being squeezed out due to the lowering of property values and thus the lower total revenue increases is the perceived right to always grow the kingdom.

I-love-Ronald-Reagan-here’s-my-flag-pin conservatives like Brookfield Mayor Steve Ponto and Waukesha County Executive Dan Vrakas need to shrink their kingdoms.

Really guys. Nothing will fall off if you spend less. I promise.

6) Just to mess with your head, I will explain there are a number of us who have had no mortgages for years and years who are thinking about picking up cheap money in a home mortgage as a hedge against what is expected to be sure inflation in the next few years.

Facebook’s Mark Zuckerberg has a nearly $6 million 30 YEAR mortgage on his California home. Why? (I’ll leave that as rhetorical.)

Done. I’ll go back and see if I can find that map.

Update: Here’s the article. Still no map.

Comments

  1. Just a big little point on the student loans. Taxpayers were responsible for student loan defaults under the prior system too.

    Nothing about the student loan overhaul in 2010 changed the government’s responsibility in that regard. The federal government insured the loans previously made by private lenders, which turned student loans into an enormous, risk-free cash cow for banks. That was a terrible deal for taxpayers though – we made next to nothing while assuming all the risk.

    Now, the taxpayers still have the risk but also have the reward, and even though default rates have gone up the last few years, the federal government is still in way better shape on this program as a result of the changes made by the Democrats.

    Furthermore, one can’t consider these numbers without also considering the explosion of shady, for-profit “universities” that have popped up in the last ten years, and understanding (and to nobody’s surprise) that their students are 2-3 times more likely to default than their counterparts in legitimate public and private academic institutions.

    If one is genuinely concerned about default rates, the quickest and easiest fix is to restrict government loans to students in accredited two or four year programs at non-profit institutions.

  2. @Recess, most of the disparity in default rates between not-for-profit and for-profit universities is the target audience. For-profits target less-educated adults taking classes at night or on weekends, while not-for-profits target 18-22 year olds, usually with at least some parental support. If you target a riskier market, you will have more defaults.

    We really should get rid of government-sponsored student loans altogether. They have done nothing but drive up the cost of college education.

  3. Default rates of gone way up. And yes to your point on funding for-profit education.

    KPOM, yes, exactly. Cheap gov’t loans go to inflate benefits and salaries for union education workers which drives up the cost for everyone.

  4. Well said, Recess.

    Also, you and Zuckerberg picking up cheap loans based on heightened future inflation expectations is exactly what the Fed. has been attempting to make you do. That’s the idea. Keynes at work.

  5. It’s because of universities that Keynes’ failed economic ideas are treated as gospel by those in power. According to Keynes, stagflation shouldn’t happen. But it does. According to Keynes, the “illegal” wars in Iraq and Afghanistan should have been stimulative. According to Keynes, Hurricane Sandy generated $42 billion of “stimulus.”

  6. So Keynes basically wants the rich to get richer, huh J. Strupp?

  7. The rise in students loans at public institutions is simply a reaction to the the dramatic reduction in State funding for higher education-this is the driver. States have shifted the cost of education to students and their families. WI used to provide 50% of the cost to educate an undergrad, that has fallen to around 20%. State investment in higher is the greatest long term investment it can make.

    Online (currently free) courses from places like Stanford look to be a part of a longer term solution if they can figure a way to monetize and credential rather than relying on exploitative for- profit outfits (think avalanche of cooking and cosmetology schools (sic).

  8. I think Khan could completely undermine the ivory towers we now call higher education. Knowledge is power, not a piece of paper.

    I’m having regular discussions w/ the youngest about whether or not now is even the time to finish a degree. (Shh. Don’t tell her older brother. He’d plunk me on the head.) But seriously? Education has never been worth so little.