Wednesday, October 06, 2010

Information overload

* The IMF cut their forecast for the US growth in 2010 but reiterated there will be no double dip. I'd argue that ex-stimulus spending we'd be pretty close to flat lining right now, but it should make for an interesting fall election cycle.

* Goldman only sees two outcomes for the US economy: a fairly bad one where the economy limps along at 1 1/2% and a very bad one where the economy slips back into recession. What concerns me is that we will need a great deal of cooperation in Washington to pull us up off the mat in 2011 and I don't see anyone in Washington that has any appetite for cooperating.

* Repeat after me -- we're out of the recession, we're out of the recession. Please ignore the quote behind the curtain "July foodstamp usage rose 1.4% from June, hitting a new record of 41.8 million, and 17.5% higher than the 35.6 million on assistance from a year ago. Participation has set records for 20 straight months."

* I keep data like this in my "Uh-oh" file -- the Federal Reserve will be the largest holder of US Treasuries in the world before the midterm elections. The Fed might own close to $850 billion in US Treasuries in early November. Holy.....That's like buying every house in town with no money down and borrowing the money from your wife. That might not end well.

* The money quote from the NY Fed yesterday basically sums up what I've been saying for 2 years -- "Nevertheless, balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be.” Again, it adds to wealth by keeping asset prices (stocks and home prices) higher than they otherwise would be. Basically, he admits that we're artificially supporting asset prices. At some point someone has to realize that artificial price supports are not in the best interest of everyone including the holders of the inflated assets.

* I knew the for-profit college industry was taking advantage of students, but I thought it was harmless profiteering until I realized that the students in these schools are eating up a huge and growing chunk of student federal aid.

"the number of students enrolled at for-profit colleges from 2003-08 has jumped from 1 million to 1.8 million but the amount of federal student aid distributed to these schools has tripled from $8 billion to $24 billion. By comparison, federal student aid to not-for-profit and public schools only increased about 69% during the same time period.

Additionally, while for-profit schools only account for about 8% of total student enrollment, they accounted for 23% of federal student aid in 2008."


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