patrick.net

>>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.

Every Scooby Doo villain wants to scare you off so they can swoop in and take that old rundown amusement park off your hands for a pittance.

Lead people to flee the bond market, then swoop back in later when it's cheaper.

OK maybe not but I trust neither of them to give me the TRUTH only what serves their interests at this moment.

HousingWatcher says

I would skip college all together and learn a trade or get an entry level govt. job and work my way up, even if I have to drive a bus or something of that kind. A college degree only makes sense if one wants to pursue healthcare.

HousingWatcher says

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.

I used to be an engineer, and it's been outsourced far longer than other fields.

kimboslice says

If I were 18 today I would have no idea what I should do.

I agree. but at least today using the power of the internet it's much easier to evaluate potantial job prospects before potentially going into college and picking your major. That, and if I had to guess, the thing to do is to go to college (without any job expectations) if you can do it without getting into any debt (I.E. - work your way though it). Then get some experience someplace in a an appropriate field and then start your own business. Either that ot get a government job if you think govenrmnet employees will still be paid above average and have pensions oong into the future.

And the third option for those who don't pursue college nobody mentioned yet is enlisting. Join any branch other than the Army or Marines (too dangerous), work your way up, and retire after 20 years with a decent pension. Then take your vet prefence and get a govt. job. And if you want a degree after those 20 years, no problem. You can get it for FREE under your GI benefits. If you got to a cheap college, you can actually pocket the difference between the tuition and your GI benefits. So you are essentially getting PAID to go to college. No, I am not making this up.

In my opinion, someone who enlists in the military tody and makes a career out of it will be in much better shape down the road than someone who goes to college.

tatupu70 says

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…

EXACTLY!... and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can't you figure out that YOUR misleading job=happiness/no job = misery perspective is irrational???

tatupu70 says

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…

and

tatupu70 says

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…

For example, one COULD have a shitty job with lots of debt and not be happy. Go figure!

tatupu70 says

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…

I still think you're still missing the point: DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!

DEBT!

If college was free then I'd suggest nearly everyone should go for the experience.

I think that Kimboslice provides a nice personal, historical perspective to this issue in his commentary:

kimboslice says

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. [...] Everyone has a college degree but few or none had much college debt as far as I know.

And from the nytimes:

And how do you think most folks who don't get scholarships or pay their tuition in cash fund the gap? hint... DEBT!

thunderlips11 says

I believe that a kid who goes to a 1 or 2 year trade school for engine repair, makes $15/hour in a dealership with benefits, and 7 years later decides to go back to school to learn engineering or physics, is in a much better position than the typical college student, who picks English because they like Jane Austen novels, only to end up serving coffee at starbucks, because millions of other liberal arts majors are fighting over generic ho-hum paying office jobs they are all roughly equally qualified to do.

Well I just enjoy reading Jane Austen for her well detailed, death-defying chase sequences, unexpected twist endings, and her incredibly rauchy descriptions of explicit sex-scenes. I could only imagine making a career out of it... how delightful!

HousingWatcher says

And the third option for those who don’t pursue college nobody mentioned yet is enlisting.

Good point, but definitely not for everyone.

terriDeaner says

EXACTLY!… and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can’t you figure out that YOUR misleading job=happiness/no job = misery false dilemma is irrational???

Perhaps I wasn't being very clear. Yes, you can have a shitty job and not be happy. But I don't know of anyone who is unemployed and happy.

So, in my mind having a job is always better than not having a job. I know--stop the presses, cut in to regular programming to announce that bit of wisdom--but I don't think you are following the logic.

If college educated folks are working at Starbucks, then those are jobs that aren't available for the high school educated. Thus, they end up unemployed at higher rates.

terriDeaner says

I still think you’re still missing the point: DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!DEBT!
DEBT!

I'm really not missing it. I promise.

Would you rather have a job and debt or no job and no debt?

Like I said--many times it doesn't make sense to go to a middling private school for liberal arts and rack up $50K of debt. But, don't paint all higher education with that brush.

the House is currently considering legislation that would “staple” a Green Card to the degrees of foreign students.

Which is probably a good idea. This is why IEEE-USA supports this change. We can do away with the indentured servitude aspect of the H1-B program (which is not supposed to exist, but we all know it does).

Morrison testified on behalf of the IEEE at the hearing.
"We are not enforcing H-1B regulations now as a country, we never really have, and despite the best efforts of USCIS (U.S. Citizenship and Immigration Service) and the Department of Labor. I doubt that we ever will," said Morrison.
But green cards don't need all the regulatory protections of H-1B workers, because as permanent residents they "have the power of the marketplace, and employers don't have any special advantage over green card workers because they are just like American citizens -- they can pick up and leave anytime they want," he said.

tatupu70 says

Would you rather have a job and debt or no job and no debt?

Hey wait... this looks like an awfully familiar dilemma.

terriDeaner says

tatupu70 says

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…

EXACTLY!… and sometimes I think I am being too sarcastic. If you can figure out that there are more possible outcomes to a CLEAR counterexample of a false dilemma, then why can’t you figure out that YOUR misleading job=happiness/no job = misery perspective is irrational???

Again, to be clear, this is not a black-and-white issue. That choice depends on the nature of the job/no job and the type and level of debt/no debt.

tatupu70 says

But I don’t know of anyone who is unemployed and happy.

I doubt that there are many that are unemployed and happy, but just because you don't know anyone who is unemployed and happy doesn't make it universally true.

Like I said–many times it doesn’t make sense to go to a middling private school for liberal arts and rack up $50K of debt. But, don’t paint all higher education with that brush.

Alas...and I had such great hope for you... just because I don't support your viewpoint it does not mean that I am anti-higher education. Try again.

terriDeaner says

Alas…and I had such great hope for you… just because I don’t support your viewpoint it does not mean that I am anti-higher education. Try again.

lol--what is my viewpoint? That having a job beats not having a job?

It has nothing to do with my viewpoint. It has everything to do with your posts... Like the one where you wrote "debt" 50 times. That seemed to indicate your thoughts on the matter.

terriDeaner says

Again, to be clear, it depends on the nature of the job/no job and the type and level of debt/no debt.

So, in your view, there are situations where you would rather be unemployed than employed?

tatupu70 says

terriDeaner says

Alas…and I had such great hope for you… just because I don’t support your viewpoint it does not mean that I am anti-higher education. Try again.

lol–what is my viewpoint? That having a job beats not having a job?

It has nothing to do with my viewpoint. It has everything to do with your posts… Like the one where you wrote “debt” 50 times. That seemed to indicate your thoughts on the matter.

?

I'm not trying to provoke you here... I just don't understand what you're getting at.

tatupu70 says

terriDeaner says

Again, to be clear, it depends on the nature of the job/no job and the type and level of debt/no debt.

So, in your view, there are situations where you would rather be unemployed than employed?

YES! do you want some examples?

no, my good fellow, I asked you a plain "yes" or "no" question.

"We can do away with the indentured servitude aspect of the H1-B program (which is not supposed to exist, but we all know it does)."

WRONG. Under the proposal, the staple-a-green-card scheme would SUPPLEMENT the current H1-B system, not replace it. You can read some very good commentary from Norm Matloff, a CS professor at UC Davis, on why this is an AWFUL idea:

http://www.cs.ucdavis.edu/~matloff/Archive/HouseHearing.txt

Giving out green cards in addition to H1-Bs will devestate the job market for tech workers. Unemployment will increase and wages will plummet.

Would you people please stop telling kids to stay out of Computer Science? We have a hard enought time hiring as it is. Enrollments never recovered after the dot-com bust. It's a dangerous and self-fulfilling prophecy you people are foolishly and dangeriously spinning, and it's seriously undermining our ability to do good software work domestically. Software isn't like manufacturing: the profit-margins on software are essentially unbounded. For high-margin businesses, companies compete on the skills of their of the workforces, not on the price. Note that we still manufacture our own airplanes, satelites, and automobiles here in the United States --high-margin items, all. Managing remote teams is tricky and introduces several kinds of risk that are each worse than just entrusting your billion-dollar opportunity to the best local talent money can buy. Companies are opening up software shops abroad because that's where they can hire, not because it's where they can hire cheaply.

The United States also has a serious advantage in software in that we've been doing this longer, and have a tremendous well of experience to draw from and perpetuate. It takes time for a technical culture to develop that's capable of shipping and maintaining a codebase with fifty million lines. I've worked with outsourced labor, and I'm here to tell you: it's not the promised land of cheap milk and low-cost honey --I'm proud to report that we still own the cutting edge of software development practice and expertise. Nevertheless: many of our neighbors would scare our chidren out of apprenticing themselves to this tradition of unmitigated fucking excellence because some backwater emerging economies in Asia have figured out the trick of writing "Hello World" in Visual Basic and are willing to do it for cheap.

Well, not me, and not mine. When my much younger brother was contemplating a CS degree, he was worried about outsourcing. I told him this: "If you go into CS, become good at it. There will always be work for good developers." That's the advice I give to my family. I stand by it. The only thing we have to fear from outsourcing is our own goddamned cowardice.

http://www.nytimes.com/2009/03/17/science/17comp.html?adxnnl=1&adxnnlx=1301950920-EtG/MwHdhSei/3VmqJacYQ

terriDeaner says

YES! do you want some examples?

Yes, please.

Just please don't say that you might be able to get a job in the future, and then you'd be employed without debt. Because that's the whole point. You are much more likely to be employed with a degree.

shrekgrinch says

For example, ‘walking away’ from a mortgage appeals to different people at different cost/benefit ratio points, wouldn’t you agree? Same for whether a college degree with tons of debt relative to the future job prospects (if any) with said degree or even just enough compensation from a job to pay off the debt AND prosper applies to each decision-maker individually
So, once you acknowledge this then you can acknowledge that there plenty of situations where people might consider it better to be unemployed than employed w/o having to specifically find/think of one.

I can't acknowledge that. It's impossible to prosper without a job.

msilenus says

When my much younger brother was contemplating a CS degree, he was worried about outsourcing. I told him this: “If you go into CS, become good at it.[emphasis added] There will always be work for good developers.” That’s the advice I give to my family. I stand by it.

Agreed. I think you could extend this advice to many fields of study.

But this is simply a broad requirement for success, and not a guarantee. What happens to all of the good students who pay for a degree (in any field), get good at what they do and still don't get a good job? What about the good students that don't get good at what they do? And what about the masses of mediocre students? They are all of likely to be heavily indebted by the time they finish school. And the current job market is damn competitive.

If you're asking if young people should be more serious about what they're spending four years or more to train to do, then the answer is yes. San Francisco has more psychiatrists than the nation of Japan, and it's still one of the most popular majors at the University of California. That is a stupidity and a problem.

If you're asking if we should be fostering a sense that studying for four years and being a good or mediocre student automatically entitles you to a good living, then answer is no. The only thing we have to fear from outsourcing is cowardice; the biggest thing we have to fear from ourselves is entitlement.

I believe those two points are deeply related, by the way.

@msilenus

Yes to #1, No to #2.