I always enjoy an Author who absolutely proves the contention he is trying to disprove. He conveniently ignores the fact that the Issuer of financial instruments has the functional liability for the security of the instrument; blaming Rating agencies and Investors for their lack of review. The Press used to talk about Teflon Dons back in the Day, but the label should actually go to the Investment Banks. There is still no assignment of responsibility this late into the financial crisis; the Investment banks disclaiming structural liability, with adamant refusal to Name the creators of the instruments in question. No one will acknowledge having written them, no one will admit to having sold them, and the institutions assert they had no way of maintaining an Overview of the progress of their sale. The idiotic thing consists of Our acceptance of the Investment banks’ proposal that Bonuses within these institutions should continue, although billions of Investor capital have disappeared. I don’t know who is guilty; but I also know that We should discontinue to award such activity with Cash, until the guilty parties have been identified.
Dare I tell Greg Mankiw and Paul Krugman that they are both being boring. They are talking Apples and Oranges here, with very little resort to Skills-Testing. Large Income families tend to pay College Costs much easier than low Income families, with few wealthy family children finding it necessary for full or Part-time employment during their college years. The difference between Working and Not probably cuts Study Time by about 7 hours per Week, along with about 14 hours from Sleep per Week. The demand from the family unit to continue and finish a college education is also much higher in wealthy families, a probable 40% higher. One should approach these Studies about collegiate behavior from the viewpoint of the Poor.
I will provide this Post from Mish which contains a possible Insight into growing problem in Our Country. We have the old economy, where the Product could be seen and felt, real Results which could be understood for their value. We also have the new economy, issuing obtuse instruments to fund operations little understood; things which could not be put in real terms which ordinary people could understand. Take the most easily understood–Cellphones. We can all understand the ease and functionality of Cellphones, but How does One put it in an economic context. We all know the Cost of Cellphones–say from 2-12 Cents per minute, but Who know the average economic gain from that minute of use? Here is the Problem: the old understood economy gets no aid or assistance from the Government, and employees within the old economy are suffering from the Inflation flowing from the new economy. The new economy, on the other hand, presents no reliable data of the value of their operation, and have received vast amounts of Government assistance from their inception. How much of the economy is Value-Added, and How much ingenious fluff; and even more, How much will the old economy have to Pay, in order to maintain the higher Wage levels of the new economy? lgl