patrick.net

Nomograph says

I live in La Jolla, which is a somewhat upscale seaside community in San Diego. On my block there are at least four people that went to Ivy League schools, and everyone else has at least a bachelors degree from a good university. I’ve never met a single plumber who lives in my town.

Yeah, all those dirty blue-collar types must be living under bridges and making ends meet by feeding their families cat food. Let them eat cake!

Nomograph says

Stick with spreading nuclear fallout hysteria and anti-education rants. Let me know how it works out for you.

No no, nomo. Wrong guy. This was the line of personal attack you were using on ME in earlier threads. But hey, since you live in an upscale neighborhood there's clearly no need to tell us little people apart.

jerrypap says

The last thing we need is more bueracratic red tape.

Maybe you didn't read the proposal? It would completely eliminate California income tax and sales tax!

That alone would eliminate vast amounts of red tape. And the property tax infrastructure already exists, so no new red tape there. Reporting leases is pretty easy.

How do you know there are no blue collar people in your upcale neighborhood? I would be willing to bet you that there are retired boomers in your area who once had blue collar jobs. Maybe there are some police officers in your area. But to say there are no blue collar workers at all is absurd. Every area has them. From what I see, older peopel are far more likely to have a blue collar job thatn a younger person is. Most white collar workers had at least 1 parent who had a blue collar job.

Yeah, most plumbers and electricians are not rich. I never argued that. But those who own their own plumbing or electrical businesses are making VERY good money... even the smaller ones.

HousingWatcher says

Yeah, most plumbers and electricians are not rich. I never argued that. But those who own their own plumbing or electrical businesses are making VERY good money… even the smaller ones.

And does one need to be rich to have a good and fulfilling life? No.

terriDeaner says

HousingWatcher says

Yeah, most plumbers and electricians are not rich. I never argued that. But those who own their own plumbing or electrical businesses are making VERY good money… even the smaller ones.

And does one need to be rich to have a good and fulfilling life? No.

It certainly helps if you have a job though...

tatupu70 says

It certainly helps if you have a job though…

So would you rather be employed at minimum wage at home depot with a increasingly outdated bachelors degree and 80K of student loan debt (non-recourse, mind you), or a plumber with a union pension collecting unemployment benefits that keep getting extended by the federal government?

The point that seems to be getting lost on some folks here is that well-paying, good quality career paths exist for those who choose not to go to college. And a lifetime of hard work will be generally be required for success in either career track.

That said, if you start further ahead you will likely finish further ahead... say, if you are a blue-blood legacy ivy league student, or alternatively if you inherit your family's successful plumbing business. Unless you piss your life away, of course, or blow your inheritance on overpriced real estate in upscale neighborhoods.

But hey, in the end the dirt tastes the same for all of us, rich or poor.

Should we all agree that sometimes college is useful? Sometimes not. It's the person's abilities that keeps him/her employed, not the college itself. But college can get your foot in the door - and in some professions it's mandatory in order to become licensed to practice.

I'd dare say that there are many programmers who do well without a degree - but percentage-wise it's probably 20% at most. Those are the ones who are talented, self-taught with a superior work ethic. I'm guessing that ten-oz-trout lies in that group. But that's not the easiest way to get your foot in the door.

I just watched a rerun of a show on CNBC called "Price of Admissions" that discusses the issue of the crippling cost of student loans - and how the default rate is reported in a manner that makes the college look favorable even if the students aren't paying them back. Interesting.

What job propsects does a political science grad from a second tier university have in today's job market? Many, if not most, college grads of today end up working in jobs that had nothing to do with their major. Political science? Anthropology? Journalism? Criminal justice? History? Yeah, good luck finding a job.... I'll see you at McDonald's. WHy do you think law schools are full of people with useless undergraudate degrees? Simple: Because they go to law school after they give up looking for a job with their nonsense degree.

elliemae says

I just watched a rerun of a show on CNBC called “Price of Admissions” that discusses the issue of the crippling cost of student loans - and how the default rate is reported in a manner that makes the college look favorable even if the students aren’t paying them back.

Hmm... what happens when they default? Are their wages garnished for the rest of their lives?

Not if they don't have any wages to garnish! And since student loans are guaranteed by the govt., guess who picks up the tab when someone defaults. You. And me. And everyone else who pays taxes. Recently Peter Schiff interviewed a recent graduate of Northeastern Univeristy who graduated with a bachelors degree and $200,000 in debt. Yes, $200,000. Do you know what you call a student loan debt that big? A mortage, but without the house. That's what I call it.

HousingWatcher says

Not if they don’t have any wages to garnish! And since student loans are guaranteed by the govt., guess who picks up the tab when someone defaults. You. And me. And everyone else who pays taxes.

Good point. But don't they impose some long-term penalty or life-long payment plan? It is my understanding that student loan debt and unpaid taxes are treated similarly during bankruptcy and cannot be discharged...

It really depends what you want to do with it. Chances are, having a undergrad degree will help get your foot in the door doing something, but not necessarily what you went to school for. It's not so much the specialization as it is showing any prospective employer that you have the self discipline and motivation to graduate from college. When I look at applications, for the most part the college name doesn't matter to me unless it's a known diploma-mill (in which case it's a total waste of money). Likewise, if you are taking on an absurd level of debt to graduate from a famous university then you are also throwing money.

Young people should invest in careers that are useful such as medicine, engineering or supply chain management. These are jobs that will always be in demand and cannot be outsourced easily. If you don't want to go to college be a locksmith, plumber or something useful.

terriDeaner says

HousingWatcher says

Not if they don’t have any wages to garnish! And since student loans are guaranteed by the govt., guess who picks up the tab when someone defaults. You. And me. And everyone else who pays taxes.

Good point. But don’t they impose some long-term penalty or life-long payment plan? It is my understanding that student loan debt and unpaid taxes are treated similarly during bankruptcy and cannot be discharged…

According to the story, yes - they garnish for life if need be. If parents co-sign, they go after the parents (which, in the show, were grieving due to the loss of their uninsured son. They're on the hook for $40k of his $80k student loans). The show refers to the marketing practices of the private colleges... like Phoenix and the technical schools. Their marketers are taught to play on the emotions of the subject and steer away from solid financial discussions. They also have students sign so much paperwork that sometimes students are applying for loans & they don't know it.

There's also mention of a company that makes bank issuing debit cards to students that are loaded with the proceeds of the loans - and a young woman they interview says that she used some of hers for shopping and partying.

HousingWatcher says

Not if they don’t have any wages to garnish! And since student loans are guaranteed by the govt., guess who picks up the tab when someone defaults.

Student loans are a special case. You cannot write them off in bankruptcy, they stay with you until you pay them off even if you default. They will garnish wages for life if they have to get their money back on these.

Engineering can most certainly be outsourced easily. It already has been outsourced to some the Indian shops in Bangalore. Not to mention that engineers are regularly replaced with H1-B slaves.

terriDeaner says

So would you rather be employed at minimum wage at home depot with a increasingly outdated bachelors degree and 80K of student loan debt (non-recourse, mind you), or a plumber with a union pension collecting unemployment benefits that keep getting extended by the federal government?

Talk about a false choice there...

terriDeaner says

The point that seems to be getting lost on some folks here is that well-paying, good quality career paths exist for those who choose not to go to college. And a lifetime of hard work will be generally be required for success in either career track.

The point isn't lost on anyone. It's just that even with those career paths, statistics show that you are much more likely to have a job if you have a degree. And you will earn significantly more over your lifetime. Last I checked there wasn't a severe shortage of plumbers...

Having said that, I agree with others that going to an expensive Uni for political science or Art degree is probably a waste of money...

It's not really debatable that College grads are doing better than non-college grads.

That said, I'm not entirely convinced of the causal effect. Getting into and graduating from a decent college takes some smarts, and a reasonably good work ethic. So they are already more likely to be successful. In some cases going to college also makes you part of a peer group that give you connections to help to succeed.

It's highly dependent on the field. Some fields you really do need the knowledge and skills you get from a degree program, and you won't even be considered without one.

In on the flip side, getting a higher degree is often financial suicide if it doesn't actually lead to a well-paying career, and you have to take out big student loans. And private student loans lenders are just as unscrupulous as sub-prime credit card or payday lenders. I know somebody who had $25K of student loan debt, went through a rough period, and the debt has now ballooned to $100K due to penalties and an absurd interest rate. Not a good place to be for a 55 year old.

"Last I checked there wasn’t a severe shortage of plumbers…"

Nor is there a severe shortage of lawyers or accountants.

One thing that nobody talks about is that white collar jobs are now being outsourced at an alarming rate. Everyting is going overseas... lawyers, accountants, engineers, radiologists, acturaries, etc. For the next generation of college graduates, the jobs they were promised are not going to be there. If anything, blue collar jobs are safer because the remainig blue collar jobs can't be outsourced (ie: plumber, truck driver, road paver, etc.). Blue collar job that can be outsourced have already bene outsourced. However, the outsourcing of white collar workers is accelerating.

So, HousingWatcher, I guess you're just going to ignore Nomographs graph of who's unemployed and who's not?

Let's look at that again:

I've already addressed that graph... it includes college graduates who are employed in minimum wage jobs. It does not tell the whole picture. I am counted as being an employed college graduate even though I don't work in a job that requires a degree.

Consider two childhood friends, Ernie and Bill. Hard workers with helpful families, each saves exactly $16,594 for college. Ernie doesn't get accepted to a school he likes. Instead, he starts work at 18 and invests his college savings in a mutual fund that tracks the broad stock market.

Throughout his life, he makes average yearly pay for a high school graduate with no college, starting at $15,901 after taxes and peaking at $32,538. Each month, he adds to his stock fund 5% of his after-tax income, close to the nation's current savings rate. It returns 8% a year, typical for stock investors.

Bill has a typical college experience. He gets into a public college and after two years transfers to a private one. He spends $49,286 on tuition and required fees, the average for such a track. I'm not counting room and board, since Bill must pay for his keep whether he goes to college or not. Bill gets average-size grants, adjusted for average probabilities of receiving them, and so pays $34,044 for college.

He leaves school with an average-size student loan and a good interest rate: $17,450 at 5%. The $16,594 he has saved for college, you see, is precisely enough to pay what his loans don't cover.

Bill will have higher pay than Ernie his whole life, starting at $23,505 after taxes and peaking at $56,808. Like Ernie, he sets aside 5%. At that rate, it will take him 12 years to pay off his loan. Debt-free at 34, he starts adding to the same index fund as Ernie, making bigger monthly contributions with his higher pay. But when the two reunite at 65 for a retirement party, Ernie will have grown his savings to nearly $1.3 million. Bill will have less than a third of that.

http://www.nypost.com/p/news/opinion/opedcolumnists/item_M3e5tqm90kfvWDU0BD4tOL#ixzz1IVAuTMfM

HousingWatcher says

It returns 8% a year, typical for stock investors...

This silly little story assumes Bill is a dumb ass and doesn't start saving until he's 34. He's got enough income that he could set aside 10% of his income to pay down debt or save, STILL have much more take home pay than Ernie, still pay off the student loan in 12 years, and have FAR more saved at 65 than Ernie.

Ernie wouldn't be able to afford to save anything. Bill on the other hand could be putting away maximal amounts in to 401k (around 16K til 50 then over 20K when over 50), and still have a life style better than Ernie's if Ernie saved nothing.

Also, the numbers don't account for the chance that either are particularly successful. If successful and in a big city, Ernie's peak pay would be more like 50 or 60K. Bill would be into six figures.

Also, not included in your analysis: job satisfaction, the learning that occurs in college that is not related to future income, the social aspect of college, to name a few.

>>Pimco “has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden,”

This sounds like another one of those analyses where someone has extrapolated the current debt and deficit to infinity.
Ah , yes, this is exactly what they did. To quote the original story completely:

"The U.S. has unrecorded debt of $75 trillion, or close to 500 percent of gross domestic product, counting what it owes on its bonds plus obligations for Social Security, Medicare and Medicaid, Gross wrote in his monthly investment outlook."

As you can see, PIMCO also held NO fedral debt as recently as 2009:

"Prior to the cuts, Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009."

Now, given that Gross/PIMCO has switched all 237B of PTTRX to other and/or shorter term investments, I guess that is a signal to the Fed that it is ok to increase interest rates again. I wonder what Goldman Sachs have to say. They may disagree with Bill Gross on that topic.

Back to the topic of how large the debt really is:

President Barack Obama’s government has increased the U.S. publicly traded debt to a record $9.05 trillion, leading Gross to compare the nation to Greece, which had its credit ratings cut two steps by Standard & Poor’s on March 29.

Oh so the traded debt is really 9T, not 75T. Alrighty then. Y'all realize that when Bill Gross talks he is just taking whatever position is good for his bond fund. He is "talking his book", as they say.

After inflation and taxes, it's hard to make money with safe investments that do not require leverage. The people who require income can either buy: bonds, cds, an apartment building, immediate annuity. I refer to people who do not or cannot work.
If I had a lot of dough, I would seek bonds from countries that have great stable currencies, like Switzerland. Of course, I don't know if they even exist. I almost doubt that Switzerland borrows money ;)

Amid the self-serving dishonesty of Bill Gross (and maybe Warren Buffet), it may very well be that the Fed hawks will concquer the Fed doves (there is a mixture of them in the Fed openmarket committee) and will eventually succeed in getting interest rates raised.

By the way, who did Bill Gross sell all his Government bonds to? Most likely a lot of them were bought by the Fed via QE2. The bllomberg article mentioned none of that, did it.

HousingWatcher says

it includes college graduates who are employed in minimum wage jobs. It does not tell the whole picture. I am counted as being an employed college graduate even though I don’t work in a job that requires a degree.

OK, well then how about stats that DO include people with college degrees working at jobs that don't require a degree?

Median annual earnings of full-time, full-year wage and salary workers ages 25–34, by sex and educational attainment: Selected years, 1980–2008

Year High school diploma or GED Bachelor's degree or higher
2000 26,300 44,400
2005 26,500 44,100
2008 25,000 45,000

http://nces.ed.gov/fastfacts/display.asp?id=77

Getting a college education is worthwhile in many ways, but going deeply into debt to get a degree from UCSC in "history of consciousness" (true degree title) may be bad financially if you can't get a job somewhere soon enough. Once upon a time UC was free. Too bad those days are gone.
I know some guys who graduated college in the 70's and they run the gamut of careers. One was married right away and his wife's dad wanted him to make more dough, he became a NYC fireman. Of course, he got himself promoted and made a very safe living. I knew another guy a few years older and he is a retired San Quentin prison guard. He sold his house in Berkeley and boy is he shitting in tall cotton today, traveling around on that pension. Several guys became lawyers (popular in the 70s), another started a painting business in California, sold it about 15 years ago. Another was a mechanical engineer, he is retired, also a guy who worked for a pharma company in sales, retired. One became an MD but works at pharma, another girl who had worked in regular jobs but sold a house or two along the way and now is retired in the Virgin Islands (darnit, she worked for me once!) I also know a few guys who are retired who got into construction during the 70's (no jobs). Everyone has a college degree but few or none had much college debt as far as I know.
Today the picture is much gloomier, because of the 1. college debt 2. outsourcing 3. trades full of ilegals
If I were 18 today I would have no idea what I should do.
The guys I know who were most successful working for others got jobs in large successful companies or government.
The other guys who were lawyers or self employed professionals are also fine (except one who has been married three times!)
There are lots of rich plumber anedotes, they might be true. HVAC maybe too.
Go to community college and then transfer to a college could be a strategy to avoid college debt bombs.

I did a small search on this thread: I found 48 instances of the word "degree" and 21 instances of the word "education".

It is problem is that too many people go to college to get a degree rather than to get an education.

The former is a piece of paper that says you spent 4 years there. The later is a body of knowledge and techniques that have been embedded into your brain.

Gross should also not lump social security, medicare and medicaid in with bonds. Bonds are debt obligations, social security and medicare are promises that can and probably will be broken or "bent". Of course there will be adjustments in entitlements. They have already broken a social security "promise" and there were no riots in the streets when they raised the age of retirement. Also, although it is alarming and true that Social Security is a Ponzi scheme, it can actually still function because no one can demand their social security payments back in a lump sum.
Debt is bad and our total debt is a time bomb. The bond market itself will make this fact clear.
I do share the gloom and doom about the dollar value.

APOCALYPSEFUCK says

Worthless, criminally insane engrossers can be put to work doing useful things and regain their self respect.

they will never have my respect, never.

Well said kimboslice. As I said earlier, some degrees are worth getting... mainly healthcare. But other than that, most degreees have questionable job prospects. Liberal arts majors might as well as be given a welfare application along with their degree since they are not going to find jobs anytime soon. Pre-med students pursing biology degrees are also screwed because if they don't get into med school (and over half of them will NOT), they now have a worthless degree and dim job prospects.

And, according to some recent news reports I read, job prospects are about to get a whole lot worse for college graduates, especially for our CS friends, as the House is currently considering legislation that would "staple" a Green Card to the degrees of foreign students.

The one thing a liberal arts degree is good for is getting accepted into a Master's program.

And after the mater's program, your still unemployed... except with more debt. Before the economy cratered, liberal arts majors could un-do the damage by going to law school. But now law school won't help one bit.

you are asking for a gambling advice on the investment forum.

@Apocalyse,

You're getting too tame these days in your punishments...

What people need to realize is that
everything finite is rationed in some way...by money or other means....

Gross and Buffet can be correct that there is danger owning bonds. China may be worrying even more. The lie that Gross made is lumping bonds together with entitlements. They both cost the government money, but one is a debt obligation, the other is a political promise. The democrats did not have an honest discussion about medicare and medicaid yet. Pelosi famously said "we have to pass it to see what's in it." Eventually the issue will be raised because it's going to be broke and all those fat slobs I see at McDonalds when I get my coffee will be showing up in hospitals soon. Incidentally, it was rare for me to see a fat surgeon a couple of years ago. They must know something.