Posts in "Mish Shedlock"

By Bonnie Kristian at 4:33PM

Jul 20, 2010

The Shape of the Recession

Options include(from least to most grim): V, U, W, WW, L. Wait, maybe that last one really ought to be |________. From Mish Shedlock's Global Economic Trend Analysis:

The global slowdown – already evident in second-quarter data for 2010 – will accelerate in the second half of the year. Fiscal stimulus will disappear as austerity programs take hold in most countries. Inventory adjustments, which boosted growth for a few quarters, will run their course. The effects of tax policies that stole demand from the future – such as incentives for buyers of cars and homes – will diminish as programs expire. Labor-market conditions remain weak, with little job creation and a spreading sense of malaise among consumers....Avoiding double dip [or W] recession will be difficult....Fasten your seat belts for a very bumpy ride.

Shedlock himself is even less optimistic, noting that an L-shaped recession is indeed possible:

More likely to me is something like an "L" or a "WW" kind of scenario with the U.S. slipping in and out of recession for a prolonged period of time, perhaps 3-4 years or more....

If the Fed and Congress drag this out, which at this point seems likely, we will see a severe "L" or "WW" shaped recession playing out over several (or more) years.

It's a fairly dire picture, to say the least. Read more of Shedlock's reasoning behind his prediction here.

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By Bonnie Kristian at 8:56AM

Jun 3, 2010

Graduates: Do something worthwhile (and deal with that debt).

Students fresh out of college, six-figures deep in debt, face decades of debt slavery....Government meddling enabled this mess, and the best cure ...is to shut off all student aid programs, offer more online programs at low cost, fire needless administrators, and get rid of bloated pension plans for teachers....

[But the] president wants to throw still more money at the problem. This will do nothing but increase the profits at questionable schools, jack up the pay of administrators, and make more student debt zombies.

Mish Shedlock's latest coverage of the student debt crisis is disturbing at best, and the government-promoted indebtedness of college students and graduates seems to show no sign of stopping. Shedlock points out the irony that Obama's plans to expand incentives for students to take out loans will only further damage the finances of the generation which played a key role in getting him into the White House.

That's a good topic for fall activism on campus (Ahem! YAL chapters), but raising awareness about -- and even changing -- the policies which promote these foolish borrowing and lending habits won't do much for those already $50,000 in the hole.

Happy Graduation! Now..uh...good luck?

Mish Shedlock reports that job prospects for last year's grads are about to get worse as 2010 graduates join the growing pool of unemployed young people:

The 2009 college graduates still without a job are in deep trouble as a wave of 2010 grads is on the way....“More so in the last year to 18 months than at any time, we have seen applicants from prior graduating classes looking for the kind of entry-level jobs we’re recruiting for,” said Dan Black, director of campus recruiting for Ernst & Young LLP, a professional-services firm headquartered in New York. “There are a lot more cohorts competing with each other: ‘09 with ‘10, probably ‘10 with ‘11.”

Unemployment among people under 25 years old was 19.6 percent in April, the highest level since the Labor Department began tracking the data in 1948.

I've been fortunate enough to remain employed since I graduated last May, but a number of people I know from college are still working part time jobs and/or living at home. 19.6% is a scary figure, especially as the unemployment rate seems to show little sign of improvement. Not surprisingly, the administration's proposals to fix the situation don't sound promising: The president "wants to fight this with more college grants as if sending more people to college is a cure for a glut of grads without job prospects." Yeah, that totally makes sense...

Cross-posted here.

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By Bonnie Kristian at 3:59PM

Mar 15, 2010

Obama to Lure More Students into Incredible Debt Loads

I've referenced Mish Shedlock before (see here and here) when discussing college tuition hikes and the problems with the student loan system. Now, I'm doing it again, because he has a timely new post on the president's disastrous plans to expand the Pell Grant system and lure even more college students into ridiculous amounts of unnecessary debt. Shedlock explains:

If president Obama gets his way, still more money, up to $50 billion, will be thrown at the failed Pell Grant system. Pell Grants are based on a means test and the funding comes with no strings attached. The money does not have to be repaid. That alone should tell you the program is rife with fraud. And it is.

He quotes a New York Times article, which explains, “If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment...They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.”

In short, further federal funding of these grants seems like a good thing in that it helps more students go to college -- but it's driving up the price of school for everyone and leaving students with debt loads they can't realistically repay and without viable job options. Shedlock's right when he concludes, "Rather than throwing hard earned taxpayer dollars at programs that invite fraud and make debt zombies out of students, it's time to kill the program entirely."

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