There is a growing discussion about whether or not college graduates are generally prepared for the workforce. This is a very interesting (and revealing) discussion.
This is not so much about GPA as it is about more fundamental problems -- attitude tops the list. Far too many college graduates think that they have 'paid their dues' by attending college and collecting a degree. Many seem to think that joining the work force is akin to joining a fraternity or sorority. They seem disappointed that employers' have high work expectations and are in no hurry to provide massive benefits and a club-med work environment to a rookie employee.
What every employer wants is someone committed to work hard, to learn new skills, and to already possess basic writing and mathematics skills. The vast majority of college graduates, measured against these expectations of business do not measure up.
That's the sad truth about higher education. We don't insist that our graduates have adequate writing and math skills to perform at a high level in the work force. Those graduates who do have these skills, likely had them before they entered college. They certainly don't gain or nurture these skills in college.
As for attitude, there is no more-forgiving environment than the modern university. Students can argue a C grade into an A grade, if they understand how things work. It is a simple task to manage one's GPA to end up with a 4.0 without serious study. Meanwhile, skipping classes, scrimping on assignments, cheating, massive drug and alcohol abuse are all tolerated with little or no punishment. Moving from the university environment to a work environment is a real culture shock for most college graduates in the modern era.
More and more the modern college and university is a great four year social experience that probably makes it more, not less, difficult to adjust to the realities of a market-based economy.
Saturday, August 31, 2013
Thursday, August 22, 2013
The Nasdaq Flap
The Nasdaq halted trading today and was down for a couple of hours. Listening to the financial media (CNBC, Larry Kudlow, etc.), you would have thought a great crime had occurred. 99 percent of the investing public had no idea and could care less, me included.
What serious investor could possibly be harmed by a two hour shutdown of the Nasdaq? Are these pundits serious? If there was ever an 'inside baseball' issue, this is it. Only manic traders and hedge funds could possibly care one way or another about the Nasdaq shutdown.
No portfolio of any serious investor could possibly be damaged by a temporary shutdown of a stock exchange. This is a ridiculous tempest in a teapot.
What serious investor could possibly be harmed by a two hour shutdown of the Nasdaq? Are these pundits serious? If there was ever an 'inside baseball' issue, this is it. Only manic traders and hedge funds could possibly care one way or another about the Nasdaq shutdown.
No portfolio of any serious investor could possibly be damaged by a temporary shutdown of a stock exchange. This is a ridiculous tempest in a teapot.
Obama and Higher Education
Just what we need, the Obama tenacles reaching into higher education. In typical style, Obama points to a problem -- the high cost of higher education -- and proposes a solution that has nothing to do with the problem and actually will likely make the problem far, far worse than it is now. This has been the pattern with the economic rescue plan, with the 'affordable' health care act, with wind and solar initiatives, and on and on. Every problem that Obama has inherited has become a much bigger problem under his leadership.
What is wrong with higher education? Mainly the government, as in most other things. Federal funding for research grants and student loans has made higher ed less interested in scholarly pursuits and more interested in the pursuit of federal largesse. Students are borrowing huge amounts of money to maintain a college lifestyle that for prior generations was simply unavailable. Who could spend that kind of money on beer and fitness centers in the good old days?
Education itself doesn't cost much to provide; less today than a generation ago thanks to the advent of the digital age. But 'higher education' is no longer in reach for middle income Americans unless they are willing to bankrupt themselves and their children to enrich university bureacrats and aging academics (and they are aging thanks to tenure). There is a growing gap between 'education' and 'higher education.' More and more these two concepts are separate and distinct -- perhaps, incompatible.
Obama is going to measure the inputs to higher education to figure out what the outputs are -- a completely absurd approach to measuring the effectiveness of an education program. Why not measure the difference between a student's life chances when entering the institution with the life chances when leaving the institution. The 'elite' colleges would not fair very well using a measure like that. But, if only inputs are measured -- the Obama plan -- then the elite colleges will do very well indeed (that's why they are called 'elite'), but the community colleges, who fare much better using my measure will not do well under the Obama plan.
Once more, under Obama, the rich get richer and the poor and middle class will be left holding the bag.
What is wrong with higher education? Mainly the government, as in most other things. Federal funding for research grants and student loans has made higher ed less interested in scholarly pursuits and more interested in the pursuit of federal largesse. Students are borrowing huge amounts of money to maintain a college lifestyle that for prior generations was simply unavailable. Who could spend that kind of money on beer and fitness centers in the good old days?
Education itself doesn't cost much to provide; less today than a generation ago thanks to the advent of the digital age. But 'higher education' is no longer in reach for middle income Americans unless they are willing to bankrupt themselves and their children to enrich university bureacrats and aging academics (and they are aging thanks to tenure). There is a growing gap between 'education' and 'higher education.' More and more these two concepts are separate and distinct -- perhaps, incompatible.
Obama is going to measure the inputs to higher education to figure out what the outputs are -- a completely absurd approach to measuring the effectiveness of an education program. Why not measure the difference between a student's life chances when entering the institution with the life chances when leaving the institution. The 'elite' colleges would not fair very well using a measure like that. But, if only inputs are measured -- the Obama plan -- then the elite colleges will do very well indeed (that's why they are called 'elite'), but the community colleges, who fare much better using my measure will not do well under the Obama plan.
Once more, under Obama, the rich get richer and the poor and middle class will be left holding the bag.
Media Misleads Once Again
Reuters has a story today about the jobless claims number that is completely absurd. According to Reuters, "...then new claims... rose...but...gave a positive signal for hiring during the month." This conclusion is based upon absolutely nothing.
What the data, in fact, shows is that jobless claims rose last week and rose more than the market expected -- not good news at all. Worse, the numbers are barely (five percent on average) lower than the numbers in the early part of the year. Given that revisions are typically well above five percent, a drop of five percent is statistically irrelevant.
The real truth is that the economy is not producing enough jobs and the few that are produced are mostly part-time, low wage jobs. Not surprising, given the Obama economic program, which guarantees economic stagnation as far as the eye can see.
The media has made a habit of consistently distorting the truth about the American economy in their cheerleading effort to defend failed policy.
What the data, in fact, shows is that jobless claims rose last week and rose more than the market expected -- not good news at all. Worse, the numbers are barely (five percent on average) lower than the numbers in the early part of the year. Given that revisions are typically well above five percent, a drop of five percent is statistically irrelevant.
The real truth is that the economy is not producing enough jobs and the few that are produced are mostly part-time, low wage jobs. Not surprising, given the Obama economic program, which guarantees economic stagnation as far as the eye can see.
The media has made a habit of consistently distorting the truth about the American economy in their cheerleading effort to defend failed policy.
Read David Stockman
A new book by David Stockman, "The Great Deformation," challenges the current orthodoxy of financial market regulation.
This book is a great read. Don't expect a calm and collected analysis. This book is definitely not calm and collected. Stockman takes on all comers and his style is blatantly polemical. He aims his brickbats at the right and the left as he excoriates the rise of indebtedness, public and private, since the 1960s.
Don't think conservatives get a free ride in this book. They don't. Ronald Reagan and Milton Friedman are targets of Stockman. Indeed, Stockman sees Reagan and Friedman as major culprits in the incredible growth of America's financial liabilities. Some of this is, no doubt, sour grapes for his well-publicized split with the Reagan Administration in the 1980s when Stockman was Director of the Bureau of the Budget. He resigned that post in a feud with the Reagan folks over their unwillingness to support spending reductions to accompany the famous Reagan tax cuts.
But, the heart and soul of Stockman's book is his interpretation of the 2008 financial crisis. Here, Stockman makes a real contribution to what has been an embarassingly simple-minded consensus view of government policy. Stockman argues that the federal government, including the Fed, should not have intervened to save AIG, Morgan Stanley and Goldman Sachs. According to Stockman, saving these firms was the main purpose of the hastily-assembled $ 780 billion bailout backage, known as TARP.
Stockman argues that the financial system and the American economy was not threatened by the collapse of AIG, MS, and GS, as was argued at the time. He shows, by analyzing the balance sheets of these firms, that the American economy could have easily survived the collapse of these firms. Few, today, agree with that, but Stockman makes his case convincingly.
In essence, Stockman is challenging the "too big to fail" crowd that dominates government policy today and that dominated government policy in the Bush Administration in 2008. By challenging a hackneyed consensus devoid of analytical underpinning, Stockman has done a great service, writing this book. He's right. Read his book.
This book is a great read. Don't expect a calm and collected analysis. This book is definitely not calm and collected. Stockman takes on all comers and his style is blatantly polemical. He aims his brickbats at the right and the left as he excoriates the rise of indebtedness, public and private, since the 1960s.
Don't think conservatives get a free ride in this book. They don't. Ronald Reagan and Milton Friedman are targets of Stockman. Indeed, Stockman sees Reagan and Friedman as major culprits in the incredible growth of America's financial liabilities. Some of this is, no doubt, sour grapes for his well-publicized split with the Reagan Administration in the 1980s when Stockman was Director of the Bureau of the Budget. He resigned that post in a feud with the Reagan folks over their unwillingness to support spending reductions to accompany the famous Reagan tax cuts.
But, the heart and soul of Stockman's book is his interpretation of the 2008 financial crisis. Here, Stockman makes a real contribution to what has been an embarassingly simple-minded consensus view of government policy. Stockman argues that the federal government, including the Fed, should not have intervened to save AIG, Morgan Stanley and Goldman Sachs. According to Stockman, saving these firms was the main purpose of the hastily-assembled $ 780 billion bailout backage, known as TARP.
Stockman argues that the financial system and the American economy was not threatened by the collapse of AIG, MS, and GS, as was argued at the time. He shows, by analyzing the balance sheets of these firms, that the American economy could have easily survived the collapse of these firms. Few, today, agree with that, but Stockman makes his case convincingly.
In essence, Stockman is challenging the "too big to fail" crowd that dominates government policy today and that dominated government policy in the Bush Administration in 2008. By challenging a hackneyed consensus devoid of analytical underpinning, Stockman has done a great service, writing this book. He's right. Read his book.
Monday, August 19, 2013
Time to Buy Emerging Markets?
Emerging market stocks have been hammered this year as the US and Europe have enjoyed one of the best stock markets in history. Why? What happened to the argument that slow (GDP) growth in the developed world and much higher (GDP) growth in the emerging economies argued in favor of a heavy commitment of investment funds to emerging market?
As it turns out, emerging market economic growth has, indeed, been much, much higher than economic growth in the Western nations. So, why did their stock markets put in such a pitiful performance thus far this year? A similar pattern occurred in US history when foreign investors, mostly British and Russian investors, lost bucketloads of money betting on growth in the US economy in the 19th century. This is not the first time that dramatic GDP growth failed to help investors in public stocks.
Many of the most vibrant companies in the countries that fall into the 'emerging market' category are not public companies. They are privately owned companies that aren't included in any of the emerging market portfolios that you and I can own. Instead, roughly 40 percent of the capitalization of 'emerging market' ETFs are typically government-owned or heavily regulated companies, such as the local telephone company or local utility company. Are these good investment bets in a third world political environment?
If emerging markets boom, you are much more likely to make money owning Coca Cola stock than the stock in the local telephone company in Egypt or Venezuela. The inherent logic behind huge investments in emerging markets never made any sense in the first place.
That said, it may now be time to buy the emerging markets, since everyone seems to be abandoning them in a rush. India's stock market lost four percent of its value in a single day at the end of last week.
It may be time to take another look at emerging markets, now that their staunchest supporters seem to be running for the exits. But, one should be cautious. Emerging markets involve stocks that have fundamentally different characteristics and corporate governance rules than Western investors may be accustomed to.
As it turns out, emerging market economic growth has, indeed, been much, much higher than economic growth in the Western nations. So, why did their stock markets put in such a pitiful performance thus far this year? A similar pattern occurred in US history when foreign investors, mostly British and Russian investors, lost bucketloads of money betting on growth in the US economy in the 19th century. This is not the first time that dramatic GDP growth failed to help investors in public stocks.
Many of the most vibrant companies in the countries that fall into the 'emerging market' category are not public companies. They are privately owned companies that aren't included in any of the emerging market portfolios that you and I can own. Instead, roughly 40 percent of the capitalization of 'emerging market' ETFs are typically government-owned or heavily regulated companies, such as the local telephone company or local utility company. Are these good investment bets in a third world political environment?
If emerging markets boom, you are much more likely to make money owning Coca Cola stock than the stock in the local telephone company in Egypt or Venezuela. The inherent logic behind huge investments in emerging markets never made any sense in the first place.
That said, it may now be time to buy the emerging markets, since everyone seems to be abandoning them in a rush. India's stock market lost four percent of its value in a single day at the end of last week.
It may be time to take another look at emerging markets, now that their staunchest supporters seem to be running for the exits. But, one should be cautious. Emerging markets involve stocks that have fundamentally different characteristics and corporate governance rules than Western investors may be accustomed to.
Wednesday, August 14, 2013
European Recovery -- Seriously?
The news services are abuzz this morning with the "news" that Europe has finally turned the corner with an economic rebound in the 2nd quarter of this year. Underneath the headline is the dismal number of an annualized 0.3 percent estimated growth rate for the 2nd quarter. Whoop-to-doo! This is a recovery. This number is not significantly different from a negative number, given the pattern of revisions. Meanwhile, unemployment in Europe remains above 12 percent and sovereign debt is soaring on to new highs.
There are further stories that Greece is on the road to recovery. What are their current statistics? GDP only dropped an annualized four percent in the first half of this year. Wow! That's really something to write home about. Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.
Wonder what the statistics would show if Europe was doing poorly?
There are further stories that Greece is on the road to recovery. What are their current statistics? GDP only dropped an annualized four percent in the first half of this year. Wow! That's really something to write home about. Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.
Wonder what the statistics would show if Europe was doing poorly?
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