Hyperdecanting

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For you winos out there (I prefer wino to wine connosieur since being called wino makes me feel less snooty) here's an interesting way to decant wine:

Wine lovers have known for centuries that decanting wine before serving it often improves its flavor. Whatever the dominant process, the traditional decanter is a rather pathetic tool to accomplish it. A few years ago, I found I could get much better results by using an ordinary kitchen blender. I just pour the wine in, frappé away at the highest power setting for 30 to 60 seconds, and then allow the froth to subside (which happens quickly) before serving. I call it “hyperdecanting.”

Congress Trying to Get More Efficient

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My fellow Americans I believe Congress might finally be endeavouring to become more efficient since they seem to be trying to kill two birds with merely one stone.

The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S…

Foreigners have accounted for a growing share of home purchases in South Florida, Southern California, Arizona and other hard-hit markets. Chinese and Canadian buyers, among others, are taking advantage not only of big declines in U.S. home prices and reduced competition from Americans but also of favorable foreign exchange rates.

To fuel this demand, the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out…

International buyers accounted for around $82 billion in U.S. residential real-estate sales for the year ending in March, up from $66 billion during the previous year period, according to data from the National Association of Realtors. Foreign buyers accounted for at least 5.5% of all home sales in Miami and 4.3% of Phoenix home sales during the month of July, according to MDA DataQuick.

Housing crisis? Check. Immigration? Check. Gotta love efficiency.

Hopefully I’ll Be Graded on a Curve

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The New York Times' Real Time Economics blog provides a handy-dandy calculator to help you determine where you stand in the United States income spectrum.  Spurred by the whole Occupy Wall Street "We are the 99%" this calculator allows you to input your annual household income and see what percentile you fall under.  Personally I hope I'm graded on a curve.  I, like Ed, like to think that I'm worth more than I make, or for that matter, more than my kids think I'm worth.

WTF TBTF BAC?

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This post by Fec about Bank of America put me off my breakfast:

So that’s $53T in unregulated derivatives being backstopped by $1T in customer deposits. And remember, those derivatives are largely contracts made with the other TBTF banks, so that if one goes down, they all go down. And there’s no way in hell the FDIC (the taxpayers) can cover those kind of losses.

At this point, I can’t imagine why anyone would leave their money, much less own stock, in a TBTF bank.

I remember the deregulation of the '90s. At the time it made sense to me that a bank could start offering their customers investment services since, you know, it let them do stuff with their money without having to inconvenience themselves with dealing with two (or more) different people.  Then again I didn't know jack about banks or the markets so it isn't a real surprise that I couldn't see the possible negatives in a deregulated environment.  In retrospect the deregulation doesn't seem like it was such a good idea, even to a financial fool like me.

**Update**- In a later post Fec provided a link to a good article explaining the Bank of America situation.

Generation X Speaks Up

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I've always been fascinated by the generation thing, probably because all I've ever heard about was how the generation I just missed, the Baby Boomers, had such an outsized influence on the world and how their evil progeny, the Echo Boomers, are likely to have an even greater impact. My generation seems to be the forgotten Olive Loaf in the generational sandwich.

I can remember going to a middle school that had empty lockers because all the Boomers were gone and they left over capacity in their wake.  I can also remember sitting in a class in college and having a professor point out that my generation, the yet-to-be-identified Generation X, probably wouldn't have Social Security waiting for us because the Boomers would live longer, and in greater numbers, than the program's designers had intended and that he couldn't imagine the political will of anyone to make the changes necessary to keep Social Security viable for later generations.  Generation X has literally been joking about not having Social Security since before we even really understood what it was, and sadly we have no reason to think it's really a joke.

I was wondering when someone would write, say or do something that would capture Generation X's spirit and if the 1,280+ comments on a blog post titled Generation X Doesn't Want to Hear It are any indication I think I might have found it:

Generation X is a journeyman. It didn’t invent hip hop, or punk rock, or even electronica (it’s pretty sure those dudes in Kraftwerk are boomers) but it perfected all of them, and made them its own. It didn’t invent the Web, but it largely built the damn thing. Generation X gave you Google and Twitter and blogging; Run DMC and Radiohead and Nirvana and Notorious B.I.G. Not that it gets any credit. 

But that’s okay. Generation X is used to being ignored, stuffed between two much larger, much more vocal, demographics. But whatever! Generation X is self-sufficient. It was a latchkey child. Its parents were too busy fulfilling their own personal ambitions to notice any of its trophies—which were admittedly few and far between because they were only awarded for victories, not participation…

Generation X is tired.

It’s a parent now, and there’s always so damn much to do. Generation X wishes it had better health insurance and a deeper savings account. It wonders where its 30s went. It wonders if it still has time to catch up…

Whatever. It’s cool. 

The post appears to have been written in response to a New Yorker article about the travails of Echo Boom generation, and I think it really does reflect how a lot of folks my age feel.

Whatever.

Max Student Loans at $2,000?

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Mark Cuban wrote the following in a blog post offering advice to the Occupy Wall Street protesters:

3.  Limit the Size of Student Loans to $2,000 per year

Crazy ? Maybe, maybe not.  What happened to the price of homes when the mortgage loan bubble popped ? They plummeted. If the size of student loans are capped at a low level, you know what will happen to the price of going to a college or  university ? It will plummet.  Colleges and universities will have to completely rethink what they are, what purpose they serve and who their customers will be. Will some go out of business ? Absolutely. That is real world. Will the quality of education suffer ? Given that TAs will still work for cheap, I doubt it.

Now some might argue that limiting student loans will limit the ability of lower income students to go to better schools. I say nonsense on two fronts. The only thing that allowing students to graduate with 50k , 80k or even more debt  does is assure they will stay low income for a long, long time after they graduate ! The 2nd improvement will be that smart students will find the schools that adapt to the new rules and offer the best education they can afford. Just as they do now, but without loading up on debt.

The beauty of capitalism is that people like me will figure out new and better ways to create and operate for profit universities that educate as well or better as today’s state institutions, AND I have no doubt that the state colleges and universities will figure out how to adapt to the new world of limited student loans as well.

Finally, the impact on the overall economy will be ENORMOUS. There is more student loan debt than credit card debt outstanding today. By relieving this burden at graduation, students will be able to participate in the economy.

We could argue about the $2,000 number, but he brings up some interesting points.  As I've mentioned in previous posts we are at the beginning of what will hopefully be 7+ years of our children attending college, and as you can probably imagine we're quite interested in how this all works. Last year when our oldest son was considering schools to apply for we had a few questions we asked him over and over when he was looking at private or out-of-state schools – "Is the difference in tuition between NC State (or any other state school) and Davidson (or any other private school) really worth it?  Will the curriculum meet your needs that much better? Is going to that school a necessity to get you into the grad school or job that you're considering?"

When you start crunching the numbers even a state school's tuition, fees, books and room and board add up to a hefty chunk of change. Without student aid you're looking at roughly $10,000 a semester and if a student graduates in four years that's $80,000.  Multiply that number by three or four and you have the total damage from a private school, and as they say in debates about the federal budget, "$10,000 here, $10,000 there and next thing you know you're talking serious money."

So how do people pay for this?  Some scholarships, some grants and lots of student loans. Unfortunately those student loans often lead to financial trouble, and in many cases students just can't, or won't, pay them off. In the '80s I worked as an intern for the National Association of Student Financial Aid Administrators (NASFAA) and back then delinquent student loans were a bigger problem than they are now.  As I made hundreds of copies of NASFAA's position papers and delivered them to the Hill I learned that schools were going out and hunting down students for whom they could secure government-backed student loans without regard for the student's actual ability to perform in the classroom.  As a result there were a ton of schools that were raking in the dough as huge chunks of their students dropped out. That means that in the worst cases people were accumulating huge piles of debt and not even getting a degree in return.  I seem to remember some reforms being implemented that helped reduce the drop out and default rates, but unfortunately loan default's are still a problem as highlighted in this Sep. 12, 2011 NY Times story:

According to Department of Education data released Monday, 8.8 percent of borrowers over all defaulted in the fiscal year that ended last Sept. 30, the latest figures available, up from 7 percent the previous year.

At public institutions, the rate was 7.2 percent, up from 6 percent, and at not-for-profit private institutions, it was 4.6 percent, up from 4 percent…

Although the new overall rates are the highest since the 1997, when they were also 8.8 percent, default rates peaked in 1990 at more than 20 percent…

Although for-profit colleges, which typically serve low-income students, enroll only about 10 percent of the nation’s undergraduates, Mr. Kvaal said, their students made up 150,000, or almost half, of the defaults…

The problem may be even greater. “Some research has shown that as few as one in five defaults at a for-profit college occur in the two-year window,” said Debbie Cochrane, program director at the Institute for College Access & Success, which runs the Project on Student Debt. “The extent of borrower distress is barely touched upon with these rates.”

The high default rate at for-profit colleges, the fastest-growing sector of higher education, has become an increasing concern for the government, since such institutions depend on federal student aid for more than 80 percent of their revenues. Last spring, in internal documents gathered from the publicly traded for-profit colleges for hearings on the student debt problem, the Senate Health Education Labor and Pensions Committee found that some companies estimated that their students had staggeringly high lifetime default rates — in one case, 77.7 percent…

Colleges with excessive default rates, either exceeding 40 percent in the latest year, or 25 percent for three consecutive years, can lose their eligibility for federal student aid programs. This year, five institutions — four of them for-profits — lost eligibility, Mr. Kvaal said.

In part because of the high default rates at the for-profit colleges, the department recently adopted regulations designed to curb recruiting abuses, and cut off eligibility for federal aid at programs that leave students with high debt loads and poor job prospects.

Reading this causes me to question whether or not capping student loans would actually lead to more for-profit schools stepping up to compete as Cuban suggests, but I do think he's right to call into question the whole higher education funding model.  If school's were suddenly faced with the loan spigot being turned off how would they adjust?  Would we see an explosion in affordable online learning initiatives?  Would we suddenly see the corporate world sending the message that alternative learning is fine by them, because quite frankly not enough students were coming from the limited number of schools left standing thanks to their massive endowments?  If so, would we see student's flocking to alternative forms of learning because they know that it could be the ticket to a brighter future?  Would they be happy without the keg parties at the Sigma Xi house?

Cuban's thrown out an idea that begs lots of questions and they're the kinds of questions I think we need to be seriously considering.

Is Your Kid’s Student ID a Debit Card?

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This morning I stumbled across this story about a community college student who was suspended for two semesters because he protested on the school's Facebook page the school's forcing students to use student ID offered by a debit card company. He was later reinstated after an advocacy group intervened on his behalf.  From the story:

Catawba Valley Community College student Marc Bechtol was suspended for two semesters earlier this week after complaining about the debit card on the school's Facebook page, according to the Foundation for Individual Rights in Education.  Bechtol's Facebook complaint included a suggestion urging readers to find "good viruses" to send to the school or register it for porn sites. On Oct. 4, Bechtol was pulled from class and told he was no longer allowed on campus.

After the Foundation for Individual Rights in Education (FIRE) intervened, Bechtol was reinstated. The school viewed Bechtol’s post as a threat, but FIRE argued that it was protected free speech and not a serious threat…

Bechtol complained last spring that school was forcing him to obtain a debit card issued by financial firm Higher One, and that his personal information would be shared with the company. When he did, he said he immediately began receiving credit card spam, which directly inspired his Facebook comment.

"Did anyone else get a bunch of credit card spam in their CVCC inbox today? So, did CVCC sell our names to banks, or did Higher One? I think we should register CVCC's address with every porn site known to man. Anyone know any good viruses to send them?" he wrote, according to the letter FIRE published.

I currently have one child attending a North Carolina university (UNCC), and will likely have two more attending NC schools in the next three years, and I can tell you I would be quite unhappy to discover that their only choice for student ID is a debit card.  I couldn't tell from reading the story if there was any way for students to get an ID that had a deactivated debit card feature, but even if there is I think the student raised a good point – why should they have to deal with their names being sold to marketers?

Something else that bothers me about this story is the school's reaction to the student's Facebook rant.  Granted he suggested students register the school with porn sites and/or infect the school's network with viruses, but you'd think the school's administrators would recognize hyperbole when they see it.  Or maybe not.  Any which way you slice it I'd say they overreacted just a touch.

Matt Taibbi’s Advice to the Occupy Wall Street Folks

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Rolling Stone columnist Matt Taibbi, the guy who's had his teeth into Wall Street for a while now and just won't let go, has some advice for the Occupy Wall Street folks.  You definitely need to read the whole thing to see the point-by-point demands he recommends they make (Break Up the Monopolies, Pay for Your Own Bailouts, No Public Money for Private Lobbying, Tax Hedge-Fund Gamblers, Change the Way Bankers Get Paid), but I thought I'd share this paragraph because it struck a chord with me:

That, to me, speaks volumes about the primary challenge of opposing the 50-headed hydra of Wall Street corruption, which is that it's extremely difficult to explain the crimes of the modern financial elite in a simple visual. The essence of this particular sort of oligarchic power is its complexity and day-to-day invisibility: Its worst crimes, from bribery and insider trading and market manipulation, to backroom dominance of government and the usurping of the regulatory structure from within, simply can't be seen by the public or put on TV. There just isn't going to be an iconic "Running Girl" photo with Goldman Sachs, Citigroup or Bank of America – just 62 million Americans with zero or negative net worth, scratching their heads and wondering where the hell all their money went and why their votes seem to count less and less each and every year.