bostonbubble.com

[john p]

You wonder why they never considered making interest on student loans tax deductable?

The double whammy for younger buyers is first, the increased tuition costs that start most people off deep in the red, and the thing that scares the absolute shai'at out of me is when older people that have their mortgage paid off saying "Hey, we ought to get rid of the mortgage interest deduction to help pay for Social Security". Can you imagine if the "Me" Generation was so greedy and selfish that they pushed that through?

[Boston ITer]

Actually, Columbia University had an online (but pay as you go) video program a decade or so before MIT and Stanford. And a century earlier, London University started an international correspondence program for Englishmen stationed around the Commonwealth.

What MIT did, however, was that they offered the course notes/handouts/etc but w/o the possibility of getting actual credits to transfer to a latter degree program. Columbia and London, however, offered the courses with credit transfer, whether or not it be to the parent school or to some other local university.

From my trips abroad, what I'd seen was that a lot of educated persons were at awe with MIT and it being the center of the S&E world for numerous decades. Today, I don't hear the same accolades from Intl friends and associates. They apparently know that a lot of R&D work isn't done stateside anymore and see MIT as a comparable university to their equivalent polytechnic at home. Apparently, a lot of them knew of the open courseware and didn't have any higher regard for the school as a result of which. Apparently, there's something to be said for being discreet with one's intellectual property. Now, for Americans, it's good that MIT is eliminating tuition; that's a step in the right direction for the future generations of scientists and engineers.

[Boston ITer]

I also believe open source is different from open courseware, primarily that people pay real dollars to go to college. A lot of end users don't have GNU plot programming skills (nor the patience to learn it), they'd rather just pick up a SmartDraw for a nominal fee (if not already pirated). Likewise, companies buy MS Office (also for a nominal rate by a company's standard) instead of OpenOffice cause they're too lazy to train their staff to avoid saving files with the docx proprietary format.

If college, esp the knowledge base of the world's top school, was just another youtube viewing, then it doesn't really add to the value of the experience. In the case for MIT, it was all that *secret* access to startup (seed capital) companies near Kendall, the latest and greatest biomaterials labs along with the lectures of Nobel Prize scientists. I mean really, if I were young kid today, I'd use MIT's course notes and prep for the London U finals while trying to work part-time at a trading firm instead of attending traditional college; I'd get pretty much the same education. And even if I were science obsessed, I'd work at a lab at the closest top school (Illinois, Cornell, UVm, etc) while doing a correspondence program.

[john p]

Hey Shiller made a prediction:

http://www.boston.com/business/articles/2008/04/22/economist_housing_slump_may_exceed_depression/

Admin: based on the numbers I recorded (page 2 of this subject), how do you think what he is saying is possible. It seems clear to me that when you take home price, interest rate and income, things seem to follow a 3 percent mortgage payment increase per year.

Do you think he's talking about apples to apples (the same 4 square colonial) or the median price home will plummet 30 percent with no change to incomes or interest rates? I'm interested in what framework of the fundamentals yields this perspective? Maybe, the fact that I've just got since the year 2000 and he talks about 1997?

I would like him to consider the graph of the house prices overlayed with the M3 money supply and then comment...

[admin]

[samz]

(Again, I'll add the caveat that I am a college professor, just to be totally up-front)

If I'm not mistaken, the best universities in most other countries are actually publicly funded, right? The idea that higher education is something that individual students have to pay for is more-or-less uniquely American.

[samz]

I think one of the big questions -- whether it's about education or real estate -- is Under what circumstances should you borrow money to buy something that, at the present time, you cannot afford?

[Boston ITer]

[samz]

Two more things (and then I promise I'll stop and get back to work):

First, there's a really interesting article in Harper's Magazine by Kevin Phillips (who just published a book called "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism"). He argues that the main economic indicators that we see have been manipulated over the years to make the economic situation look better than it is. His main examples and unemployment and the Consumer Price Index. It's pretty compelling stuff. I can paraphrase if people are interested.

Second, according to recent articles about home prices, the Northeast is bucking the downward trend. I'm not sure what that's about -- the data covers a pretty large area.

[BK]

[samz]

[admin]

[Guest]

[quote="samz"][quote="BK"]

[samz]

[quote="Anonymous"][quote="samz"]

[samz]

Back on topic...

The key idea in Harper's article by Kevin Phillips is that core economic measurements, such as unemployment, CPI, and GDP, have been manipulated over the years to make them look better. It's not an outright cooking of the books, but the formulas have been tweaked to make the results better.

Here are some examples:

Jobless numbers: Kennedy's administration was the first to mess with this statistic. They came up with the idea of excluding "discouraged workers" who had stopped looking for work. The Reagan administration further improved the unemployment rate by reclassifying members of the military as "employed" rather than "outside the workforce."

Consumer Price Index -- computed as the cost of a basket of consumer goods -- is the worst. Nixon's federal reserve chairman came up with the idea of "core inflation", which excludes "troublesome" price categories, such as food and energy. The Reagan administration decided that housing, too, was "overstating" the CPI, so it replaced actual housing costs with something called "Owner Equivalent Rent", which attempts to capture what a homeowner *might* get by renting his or her house. Three other downward adjustments, proposed by the HW Bush administration and implemented in the Clinton administration: "product substitution" which replaces products that have become too expensive with lower cost alternatives, "geometric weighting" which lowers the weighting of products whose prices are rapidly increasing (ostensibly to account for lower consumption), and the "hedonic adjustment", a totally bizarre calculation that pushes prices lower by trying to quantify the improved "quality" of new products (e.g., if this year's detergent is better than last year's detergent, but costs the same amount, we should adjust its price down to make the comparison "fair".)

Phillips estimates that if you roll back all these changes, the rate of inflation is somewhere in the range of 7 to 10 percent, and unemployment is somewhere between 9 and 12 percent.

Robert Hardaway, a professor at University of Denver, is quoted as saying that the subprime lending crisis can be directly traced back to the 1983 decision to exclude the price of housing from the CPI ... With the illusion of low inflation inducing lenders to offer 6 percent loans, speculation has run rampant on the expectations of ever-rising home prices.