Free Markets, Free People

Daily Archives: May 19, 2011

The Third Age of Money

The first age of money was the age of gold and silver; your basic metal currencies. The second age was the age of the freely convertible fiat currency.  The third age of money will be virtual, unhackable, and anonymous. So, this is what you call “interesting”:

Bitcoin is an open-source virtual currency generated by a computer algorithm that is completely beyond the reach of financial intermediaries, central banks and national tax collectors. Bitcoins could be used to purchase anything, at any time, from anyone in the world, in a transaction process that it is almost completely frictionless. Yes, that’s right, the hacktivists now have a virtual currency that’s untraceable, unhackable, and completely Anonymous.

And that’s where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he’s ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency. If you think there’s a shadow banking system now, wait a few more months. The political part is that, unlike other virtual currencies like Facebook Credits (used to buy virtual sock puppets for your friends), Bitcoins are globally transferrable across borders, making them the perfect instrument to finance any cause or any activity — even if it’s banned by a sovereign government.

All is proceeding as I have foreseen.

Dale Franks
Twitter: @DaleFranks

Obama’s Middle East speech

Or same song, different verse.

Not much new in this that I was able to discern, especially about Israel.  While claiming that the Palestinians have some responsibilities and the Hamas/Fatah reconciliation is troubling, most of the onus for peace is once again placed on Israel with the claim that it should withdraw to the ‘67 borders.  Of course the last time they agreed to a withdrawal and did so, they paid a price for it.  Doubt this is going to fall for that again.

Couple of interesting things to note.  Speaking of Libya:

As I said when the United States joined an international coalition to intervene, we cannot prevent every injustice perpetrated by a regime against its people, and we have learned from our experience in Iraq just how costly and difficult it is to impose regime change by force – no matter how well-intended it may be.

About “Arab spring”:

Indeed, one of the broader lessons to be drawn from this period is that sectarian divides need not lead to conflict. In Iraq, we see the promise of a multi-ethnic, multi-sectarian democracy. There, the Iraqi people have rejected the perils of political violence for a democratic process, even as they have taken full responsibility for their own security. Like all new democracies, they will face setbacks. But Iraq is poised to play a key role in the region if it continues its peaceful progress. As they do, we will be proud to stand with them as a steadfast partner.

Hmmm … anyone else spot a little contradiction here?

Back to the now officially “illegal” war in Libya:

Unfortunately, in too many countries, calls for change have been answered by violence. The most extreme example is Libya, where Moammar Gaddafi launched a war against his people, promising to hunt them down like rats. As I said when the United States joined an international coalition to intervene, we cannot prevent every injustice perpetrated by a regime against its people, and we have learned from our experience in Iraq just how costly and difficult it is to impose regime change by force – no matter how well-intended it may be.

But in Libya, we saw the prospect of imminent massacre, had a mandate for action, and heard the Libyan people’s call for help. Had we not acted along with our NATO allies and regional coalition partners, thousands would have been killed. The message would have been clear: keep power by killing as many people as it takes. Now, time is working against Gaddafi. He does not have control over his country. The opposition has organized a legitimate and credible Interim Council. And when Gaddafi inevitably leaves or is forced from power, decades of provocation will come to an end, and the transition to a democratic Libya can proceed.

Two points – one, massacres in Iraq, using the Obama reasoning here, were already ongoing.  Anyone, was Saddam hunting down opposition like “rats”?  Er, yeah.  So, what’s the beef with doing what Obama attempts to sell here for that reason only?  And if Iraq was a dumb war, notwithstanding the same thing happening as in Libya, does that make Libya a dumb war (as well as “illegal”)?

Two – How does he know that “the transition to a democratic Libya” will be the result?  And how does he plan to ensure it? 

Obama gave Syria and Iran a tongue lashing, but I expect little else to occur in terms of action.  Some sanctions will be imposed which, as they always do, hurt the poorest in the nation.  He also mentioned Bahrain and Yemen in the speech.

Conspicuously absent from his bombast was any criticism of Saudi Arabia.

Like I said, nothing much new in the speech.

~McQ

Twitter: @McQandO

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College grads finding job market “humbling”

In line with the recent posts here on the worth of college education (and Bryan’s post on a possible loan bubble) it seems that the job market is also making a statement on college:

Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates — the people who were most protected from the slings and arrows of recession — the outlook is rather bleak.

Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.

Of course in any economic downturn, especially in one which unemployment is high, this sort of thing is going to happen.  According to the NY Times story, 22.4% of recent graduates are not working.   22% are not working in jobs that require a college degree.  And, of course, of the 55.6% who are working in jobs requiring a degree, many are not working in their degree area.  It also appears that the median salary has dropped significantly during the recession – after all, it’s a buyer’s market:

The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account.

That’s a significant drop and again, it makes the argument that going to work for 4 years instead of college may have two benefits:  1) no college loan debt and 2) 4 year work history which would most likely see a salary or earnings well above the median starting salary for college students.  And as might be expected, it is those college students who are graduates from liberal arts programs who are suffering most.

The choice of major is quite important. Certain majors had better luck finding a job that required a college degree, according to an analysis by Andrew M. Sum, an economist at Northeastern University, of 2009 Labor Department data for college graduates under 25.

Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.

So what sort of jobs are those who are degreed but not working in a job requiring a degree holding?

An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.

Of course that has a ripple effect in which less-educated workers may be displaced.

“The less schooling you had, the more likely you were to get thrown out of the labor market altogether,” said Mr. Sum, noting that unemployment rates for high school graduates and dropouts are always much higher than those for college graduates. “There is complete displacement all the way down.”

Obviously the lesson here is education is still valuable, the question however is “how valuable”?  Valuable enough to commit to the tremendous debt a college degree can bring?  It is that sort of ROI that young people must begin making – especially those considering liberal arts programs.  Assuming a desire by most who attend college to use their credentials to get a high paying job and secure a better future than foregoing such a program of study has to be under scrutiny by those in such a situation.

Opting to begin work out of high school vs. pursuing a college degree may become a real possibility.  And naturally that will have another ripple effect.  Colleges and universities will see decreased attendance which will in turn mean less revenue and possibly spur competition among them to attract students.

I actually see that as a beneficial effect, especially given the cost of higher education today, that may eventually make the ROI work somewhat better for potential college students.  It is obvious the cost of higher education has risen much higher than any inflation rate.   That’s a bubble that needs to be popped and popped rather quickly.  Dropping enrollment because of a perception of not receiving the value for what is paid may be the motivator for higher education to cut their prices or suffer the consequences.

 

education

 

~McQ

Twitter: @McQandO

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