You kind of mealy-mouthed your way through the answer, but OK. I’ll run with it for awhile.
I will agree with you for the moment.
WHY do we agree they deserve an education?
WTF are you talking about? You said that Madoff was refgulated and that didn’t stop him from committing fraud. I pointed out that hedge funds are not regulated (at least not to any significant degree) and now you point out that Madoff didn’t cause the recession?
The recession was triggered by the bursting of the subprime bubble which was driven by PRIVATE mortgage companies. There was plenty of underlying weakness in an economy and when the only economic driver in the economy (the housing bubble) collapsed, the economy went with it.
/sigh. OK, lets try this again. The collapse of the subprime mortgage market triggered the real estate collapse. That subprime market was driven overwhelmingly by unregulated PRIVATE mortgage companies writing mortgages with a consenting (but perhaps underinformed) borrower and then they securitized and sold those mortgages to a consenting (and perhaps underinformed) PRIVATE investors (everyone from banks to pensions to hedge funds to mutual funds). You can try to pin the blame on FNMA and FHLMC all you want but the dry underbrush in this forest fire was the private mortgage company originated mortgage, not the conforming or CRA agency backed mortgages. Might I suggest, that you are just as susceptible to political rhetoric as you accuse the rest of us being.
Yes. Because I thought you were throwing around the hedge fund and Madoff arguments as reasons for how private transactions caused the recession.
They didn’t. Because a limited pool of investors and individuals placed their money with those entities, and lost it. And it largely stopped there.
A limited pool of investors and individuals placed their money in securitized mortgages, and lost it. And… it didn’t stop there.
How does the total value of those mortgages compare with the money supply? Use whatever metric you wish.
Ah…it wasn’t a limited pool. There’s the rub.
It was you and me. See if you can figure out how that happened without your consent.
I’m not sure what was mealymouthed about my answer. Was it not direct enough?
There are all sorts of reasons we agree they deserve and education (or more accurately that we want to provide them an education). Do you really not know?
Morally speaking, a free public education is the most effective method we have of levelling the socioeconomic playing field.
Fiscally speaking, the dollars spent on educating a child more than comes back to us in additional future tax revenue because of the increased earning power of a better educated labor pool (this certainly hold true for up to high school education and probably holds true through the first two years of college).
You need to distinguish between proximate vs ultimate cause.
The subprime loans are not the ultimate cause, they are the “proximate” cause. Only superficial analysis or mindlessly regurgitating the talking heads on TV makes one think that subprime loans caused the problem.
Subprime loans are fed by something. That something is loose money. You flood the banking system with lots of money — that money will race around the global markets until it finds something (any asset) to bid the price up until a bubble is burst.
Therefore, if subprime loans are the “proximate” cause… what’s the real “ultimate” cause? Hmmm…
I would argue that those are roughly the same. But OK. I agree.
I would probably phrase it a little differently, saying that it is in our country’s self-interest, and therefore my self-interest, to have a highly productive and competitive workforce. With maybe a few other things around the edges like being able to participate in a vigorous democracy.
Fine.
So I would assert that parents (individual consumers), representing the marketplace as it were, are certainly in the best position to decide how to educate their children to achieve that goal. Not only that, it makes ‘moral sense’ to me (to invoke your argument). Who else would you want deciding to educate children other than their parents?
Do you disagree? If so, who do you claim is in a better position to make that decision? You know, the decision about what is best to achieve a highly productive and participatory workforce?
When I was in the public school system in Detroit we beat private schools endlessly in educational competitions. Private schools were trying to keep up. In my high school in Detroit, they offered slow, average and fast classes. If you were interested in being a mechanic or working in a shop we had schools that specialized in just that.(Wilber Wright, for one) We had all the sports and extra cirricular activities you could image. We had several Languages taught,Latin, French, Spanish, Russian and Japanese. The school system was absolutely not broken. It was predominantly white though. Few inner city schools back then had the opportunities we did. Yes the schools have gone to hell. But for a long time they were fine.
“Tracking” by ability is now politically incorrect (particularly because of inequality of outcome among races), as is implying that not all kids should get on the college track.
What part of the current, non-voucher system prevents parents from taking their kids out of public school and into private school?
Answer: nothing. Parents can, and do, do this today.
So you should be perfectly happy with how things are currently, and have no motivation to try to sabotage the public school system and make it worse than it already is.
It doesn’t matter what percentage of the money supply was represented by subprime mortgages. It was enough. When the subprime mortgages drove up the prices of homes, it also drove up prices for homes bought with conforming agency backed mortgages (the kind bought with 20% down, full documentation, credit scores and income verification) and while THAT number represents a significant percentage of the money supply, it is not really relevant because the money supply effects occur later on.
When the subprime mortgage market collapsed, it took the wind out of the sails and people could only get conforming mortgages. A lot of the people who were buying homes didn’t qualify for mortgages under FNMA and FHLMC standards and buyer’s side of the market dried up. This didn’t just drop prices for the subprime homes, it impacted prices for all homes (starting from the bottom up).
EVERY mortgage company was now holding mortgages on homes that were underwater. This included FNMA and FHLMC and their preferred shares became virtually worthless. The government stepped in to explicitly guarantee agency backed debt (there is widespread agreement that failure to do this would have made the banking system collapse as almost every bank would become bankrupt).
Banks operate on a fractional reserve system. IOW, if they have a $100 in deposits, they can lend out $95 of those dollars and only need to hold on to $5 (I’m not really sure what the reserve rate is) in case some of those loans go bad or if someone wants to make a withdrawal (in fact this fractional reserve system is the entire basis behind the “multiplier effect” that you hear so much about). Without a fractional reserve system, banks could not offer interst on your money and would actually have to charge you to store your money.
The $5 is called a reserve, it is required by government regulators in order to be FDIC insured (and frequently just to have a banking charter). They get $1 worth of regulatory credit for every $1 they hold in the form of treasuries or agency backed debt. They get less credit for other types of security. One popular form of security was FNMA and FHLMC preferred stock, it had an attractive return compared to its regulatory reserve credit, these are now virtually worthless. This created a huge reserve deficiency and banks retrenched and waited for their current obligations to generate enough income to plug up their reserves. This created a credit crunch and that led to all the problems we see today (I could go through the pathology of a recession with you but its an ugly downward spiral that requires massive coordinated action to reverse… enter government action). The credit crunch is what dried up the money supply, not the losses on the subprime mortgages (except indirectly).
First of all, I don’t think you know what you are talking about. FNMA and FHLMC holds very little of that paper. Agency backed paper is by definition guaranteed by FNMA and FHLMC (and FHA and other agencies) but they hold and guarantee VERY LITTLE subprime paper and every last cent of that subprime paper is fully documented, with income verification and all that jazz. There is a difference in kind between the subprime paper written by Countrywide and the subprime paper written for agencies. That’s not to say that this real estate collapse hasn’t adversely affected FNMA and FHLMC but they were not the genesis of this problem.
Second of all, did you vote in the last election? I have to help pay of the Iraq war debt regardless of how I feel about that war, you are responsible for federal debt regardless of how fiscally irresponsible you feel we have been. You could always expatriate and renounce your citizenship if you feel the rpice of being an American has become too high.
In law, you don’t look beyond proximate cause to assign blame because you then become so attentuated that you might as well blame everything on the big bang or original sin. Heck you could blame the invasion of Iraq on Monica Lewinsky if you really reach far back enough (but for Monica Lewinsky, Clinton would have been able to campaign for Gore and Gore would have won and we would have gone after Osama Bin Laden instead of Saddam Hussein, so we would have stayed in Afghanistan).
But if I were to go one level beyond the subprime crisis which in fact precipitated the economic crisis, I would probably have to point to interests rates held artrifially low by an Ayn Rand worshipping fed chairman that thought he was a rock star; deregulation of the financial markets (starting during nthe Clinton years and continued with a passion during the Bush years); the growth of unregulated industries like private mortgage companies and the credit default swap market; an anti-regulatory environment that discouraged federal bureaucrats from doing anything that might interfere with the free market. So I guess we are back to blaming the religious worship of laissez faire principles.
I disagree somewhat. I think we should give a lot of deferance to parents in how they choose to educate their children. But when it comes to the public education we make available to everyone, I think that we should exercise a bit more control. Like I have said at least a dozen times, I have no problem with charter schools with lottery based admissions. I have little problem with magnet schools with test based admissions. I have no problem with special schools for those with special needs. I have no problem with putting all the disruptive kids in a special school. I don’t have a problem with home schooling that meets minimum criteria. I DO have a problem with subsidizing the tuition at Andover with vouchers.
DC, Virginia, Maryland, NY, NJ all have special programs for smart kids. I think they all have magnet schools as well. There is dramatic racial inequality in results, we try to mitigate some of it by adding a few subjective factors here and there but we basically have to live with the racial disparity or just get rid of having special classes or special schools for smarter kids.
Answer: Something. The fact that several $000 of their money has already been extracted, by force, to support the local public (and likely, unionized) school district.
And they may have nothing left to pay for private school.
[QUOTE=Damuri Ajashi;11316372Like I have said at least a dozen times, I have no problem with charter schools with lottery based admissions. I have little problem with magnet schools with test based admissions. I have no problem with special schools for those with special needs. I have no problem with putting all the disruptive kids in a special school. I don’t have a problem with home schooling that meets minimum criteria. I DO have a problem with subsidizing the tuition at Andover with vouchers.[/QUOTE]
So to summarize, you have no problem with letting parents choose the best schools for their children. Excellent. We’re getting closer to agreement by the minute.
But you have contempt for clusters of children (and their parents) who are wealthy.
Have I summarized your position accurately?