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Wednesday, May 30, 2012

This Is Getting Really Scary!!  The President Is Now Deciding Who To Kill Without Any Agreement From Congress Or Us!!  It Is Like George W Has Returned!!!!  You Should Be Scared!!  The New York Times Is!

Too Much Power for a President


It has been clear for years that the Obama administration believes the shadow war on terrorism gives it the power to choose targets for assassination, including Americans, without any oversight. On Tuesday, The New York Times revealed who was actually making the final decision on the biggest killings and drone strikes: President Obama himself. And that is very troubling.

Mr. Obama has demonstrated that he can be thoughtful and farsighted, but, like all occupants of the Oval Office, he is a politician, subject to the pressures of re-election. No one in that position should be able to unilaterally order the killing of American citizens or foreigners located far from a battlefield — depriving Americans of their due-process rights — without the consent of someone outside his political inner circle.
How can the world know whether the targets chosen by this president or his successors are truly dangerous terrorists and not just people with the wrong associations? (It is clear, for instance, that many of those rounded up after the Sept. 11, 2001, attacks weren’t terrorists.) How can the world know whether this president or a successor truly pursued all methods short of assassination, or instead — to avoid a political charge of weakness — built up a tough-sounding list of kills? 

It is too easy to say that this is a natural power of a commander in chief. The United States cannot be in a perpetual war on terror that allows lethal force against anyone, anywhere, for any perceived threat. That power is too great, and too easily abused, as those who lived through the George W. Bush administration will remember.
Mr. Obama, who campaigned against some of those abuses in 2008, should remember. But the Times article, written by Jo Becker and Scott Shane, depicts him as personally choosing every target, approving every major drone strike in Yemen and Somalia and the riskiest ones in Pakistan, assisted only by his own aides and a group of national security operatives. Mr. Obama relies primarily on his counterterrorism adviser, John Brennan. 

To his credit, Mr. Obama believes he should take moral responsibility for these decisions, and he has read the just-war theories of Augustine and Thomas Aquinas.

The Times article points out, however, that the Defense Department is currently killing suspects in Yemen without knowing their names, using criteria that have never been made public. The administration is counting all military-age males killed by drone fire as combatants without knowing that for certain, assuming they are up to no good if they are in the area. That has allowed Mr. Brennan to claim an extraordinarily low civilian death rate that smells more of expediency than morality. 

In a recent speech, Mr. Brennan said the administration chooses only those who pose a real threat, not simply because they are members of Al Qaeda, and prefers to capture suspects alive. Those assurances are hardly binding, and even under Mr. Obama, scores of suspects have been killed but only one taken into American custody. The precedents now being set will be carried on by successors who may have far lower standards. Without written guidelines, they can be freely reinterpreted. 

A unilateral campaign of death is untenable. To provide real assurance, President Obama should publish clear guidelines for targeting to be carried out by nonpoliticians, making assassination truly a last resort, and allow an outside court to review the evidence before placing Americans on a kill list. And it should release the legal briefs upon which the targeted killing was based.
Here Is The Real Story About Unemployment!

Today's Washington Post clearly identifies the facts about unemployment.  There are two important embedded stories there.  1)  All of the unemployed middle aged people cannot be saving for their retirement the way Paul Ryan imagines they are doing.  2)  Every day of unemployment among our most skilled and talented members is production that is lost to our economy forever.


Job recovery is scant for Americans in prime working years



The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics, reflecting the profound and lasting effects that the downturn has had on the nation’s economic prospects.
By this measure, the jobs situation has improved little in recent years. The percentage of workers between the ages of 25 and 54 who have jobs now stands at 75.7 percent, just a percentage point over what it was at the downturn’s worst, according to federal statistics.

Gallery
Graphic
Prime-age workers slow to recover from the recession.
Click Here to View Full Graphic Story
Prime-age workers slow to recover from the recession.


Before the recession the proportion hovered at 80 percent.

While the unemployment rate may be the most closely watched gauge of the economy in the presidential campaign, this measure of prime-age workers captures more of the ongoing turbulence in the job market. It reflects “missing workers” who have stopped looking for work and aren’t included in the unemployment rate.

During their prime years, Americans are supposed to be building careers and wealth to prepare for their retirement. Instead, as the indicator reveals, huge numbers are on the sidelines.

“What it shows is that we are still near the bottom of a very big hole that opened in the recession,” said Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank.

The falloff has been sharpest for men, for whom the proportion had been on a slow decline before the recession. The percentage of prime-age men who are working is smaller now than it has been in any time before the recession, going all the way back to 1948, according to federal statistics. The proportion of prime-age women is at a low not seen since 1988.

The nation’s unemployment rate has shown signs of improvement, ticking down from 10 percent to 8.1 percent. But if it tallied people who have given up looking for jobs, it would certainly be higher.
The ratio of employment to population, which economists refer to as “epop,” “is a much better measure for what people are experiencing in the job market,” Shierholz said. “The unemployment rate is screwy right now because the labor market is so weak that people have stopped trying.”

For example, last month, the unemployment rate ticked down from 8.2 percent to 8.1 percent. Ordinarily, a drop in unemployment would be interpreted as a sign of improving economic health. But it dropped largely because so many people stopped looking for jobs.

Shierholz estimates that about 4 million workers have simply stopped looking, and so do not show up in the tally used for the unemployment rate.

As the presidential race heads into the summer, the health of the economy — and how voters view it — becomes critical, and for many people, the job market is their most significant contact with the economy.
According to the most recent Washington Post-ABC News poll, the issue of paramount interest to voters is the economy and jobs, with more than half describing it as the “single most important issue.”

By comparison, the next most important issue, health care, trailed far behind at 7 percent, and moral and family values followed at 5 percent.

Tuesday, May 29, 2012

Some Really Good News!!

As you know from reading this rant, Healthcare Costs are THE Number One problem facing this country.  The number two source of rapidly increasing health care costs comes from chronic diseases, and the leading chronic disease is diabetes, which is closely associated with being over weight or obese.  Now some private companies are bringing some new and experimental approaches to weight control among their employees.  This Opinion column from the Los Angeles Times outlines some of these experiments.

 

Can we all get healthy together?

A healthcare workers union and Kaiser Permanente are trying a novel approach to tackle rising costs.



Barry's Boootcamp
A row of treadmills buzz along with the motion of the legs and feet at Barry's Boootcamp in West Hollywood. The United Healthcare Workers, a union that represents 150,000 workers in hospitals and nursing homes, and the giant healthcare provider Kaiser Permanente recently signed a contract that creates a novel incentive for workers to get in better shape, testing the notion that peer pressure may be a more effective way to promote healthy lifestyles than individual rewards or penalties. (Los Angeles Times / May 25, 2012)




No one sees the connection between unhealthy lifestyles and rising medical costs more clearly than healthcare workers, and yet they're hardly models of vim and vigor — a Thomson Reuters Healthcare report last year found hospital employees to be "generally sicker than the rest of the U.S. workforce." Now the giant healthcare provider Kaiser Permanente and a coalition of unions led by the United Healthcare Workers are trying to tackle this problem. They recently signed a contract that creates a novel incentive for workers to get in better shape, testing the notion that peer pressure may be a more effective way to promote healthy lifestyles than individual rewards or penalties.

The Kaiser deal reflects a widespread effort by employers to slow the growth of healthcare expenses, in part by shifting more of the cost onto their workers, in part by reducing the demand for treatment. A survey by the National Business Group on Health found that almost three out of four employers offered workers incentives last year to participate in health improvement programs; the average incentive has increased from $260 in 2009 to $460 in 2011.

Some unions have been notorious for trying to insulate their membership from the fitness push. The United Auto Workers, for example, has fought against efforts to ban smoking at job sites. More subtly, by bargaining for insurance plans with little or no out-of-pocket costs, unions reduced the financial incentive for their members to stay in shape. That approach isn't sustainable, however, and it ignores the trade-off between healthcare costs and wages. The more a company spends on insurance policies with low deductibles and co-pays, the less it can spend on payroll.

The contract signed this month by negotiators for Kaiser and the union coalition heads in a different direction. It sets a modest fitness goal for its members — a 5% improvement in body mass, cholesterol, blood pressure and smoking rates by the end of 2016 — and promises financial rewards if the workers collectively stay on target. Although the details have to be ironed out, the rewards will be pegged to the savings that Kaiser sees in its healthcare costs. It's hard to say how much of a bonus workers stand to reap, but considering how much the company spends on employee healthcare, the savings could be significant.
The incentive is unusual because it's based on the group's progress, not each employee's. That's a departure from the typical approach, which stresses individual responsibility and rewards (or, less often, punishments). The theory is that workers will be more motivated if they know that their efforts will affect their colleagues' pay as well as their own, and that groups of people are more likely to stay committed to diets and exercise than individuals. Of course, the group approach means that the rewards won't necessarily match the effort that each person makes (or doesn't make). But that's already the case with group insurance plans, where the premiums paid by the healthy subsidize the care received by the sickly.

It's important for companies to experiment with different approaches to wellness because it's not clear yet what incentives will be effective in combating today's biggest health threat — obesity — over the long term. The potential benefit for business is clear, with some companies reporting dramatic savings (both from lower healthcare costs and higher productivity). But relatively few employers are actually measuring the effectiveness of their wellness programs, and those programs have been attracting only a fraction of their workers. So there's much progress still to be made.

The UHW, a division of the Service Employees International Union which represents 150,000 hospital, nursing-home and home healthcare workers, is trying to reposition itself as an advocate for better care and lower medical costs in society at large, rather than just looking out for its own members' interests. Along those lines, it's backing a new initiative by Gov. Jerry Brown to get Californians into better shape. But as UHW-West President Dave Regan recently told The Times, the current fitness of healthcare workers makes them a poor advertisement for the benefits of a healthy lifestyle. The union's contract with Kaiser shows that it's ready to start rectifying that.

Monday, May 28, 2012

A Question For You?

Paul Ryan says that the partial safety net we have constructed to protect the less fortunate among us is, "a hammock that lulls able- bodied people to lives of dependency."

My question is this, "Doesn't that description fit Congress perfectly?"

No, this is not a joke.  What do you think?

Tuesday, May 22, 2012

Add Retail To Banks and Movie Theaters!

New York Times, Tuesday, May  22, 2012


As U.S. Retailers Retreat, a Japanese Chain Sees an Opening



Many American retailers are cutting back at shopping malls. Chains like Gap Inc., Abercrombie & Fitch, Coldwater Creek and Talbot’s say they have too many stores at too many malls. Hundreds of stores are on the chopping block. 

Now, that pain is being seen as an opportunity — for some foreign retailers. 

Uniqlo, the Japanese basics brand, is starting aggressive growth plans at shopping malls that are expected to include 20 to 30 new stores a year over the next eight years.
In its first move, Uniqlo, which has three stores in New York City and one opening this fall in downtown San Francisco, has signed a lease at the Garden State Plaza mall in Paramus, N.J. The store will be in a space previously occupied by an Old Navy store. 

Other international retailers, from the low end, like Massimo Dutti and Topshop, to the high end, like the PPR brands Yves Saint Laurent, Bottega Veneta and Balenciaga, are also adding new stores in the United States.

Over all, the retail real estate market is starting to recover from the recession. Rents rose in the first quarter and retail vacancies declined for the first time since 2005 as some companies opened new stores and expanded existing ones, according to the research firm Reis. 

“This is a country of shopaholics,” said Faith Hope Consolo, chairman of the retail group at Douglas Elliman, who is handling inquiries from retailers in Australia, New Zealand and Canada about opening in this country.
Overseas companies are looking to the American market because of relatively easy access to credit, fewer regulations than some other countries, cheaper rents because of the recession and the promise of getting Wall Street’s attention, she said. And many shoppers here like the panache of clothing from abroad.
“It’s a fickle market here — the consumer always wants something new,” Ms. Consolo said.
Uniqlo is drawing particular attention because it has succeeded in selling basic and affordable clothing, a category that American companies like Gap and Old Navy once dominated. But it failed in a previous effort to expand into American shopping malls. In 2006, it closed stores in three malls in New Jersey it had opened in 2005. 

This time, company officials said, they have learned from their mistakes — most notably, a recognition that the Uniqlo (pronounced YOU-nee-klo) brand needed a bigger introduction in the United States. Last time, the retailer leased standard-size mall locations — about 7,000 square feet each — that did not distinguish the brand from competitors. The new Garden State Plaza space, by contrast, is 43,000 square feet, and it has external exposure, meaning Uniqlo’s signs can be seen from a nearby highway and the mall’s parking lot.
“Our brand is still not a household name, so we need a bigger box than some of our competitors,” said Shin Odake, the chief executive of Uniqlo’s United States division.

Well saturated in Japan, Uniqlo is now posting most of its growth overseas. Fast Retailing, the Uniqlo parent company based in Tokyo, said sales in Uniqlo’s international division grew 68 percent to 84.8 billion yen ($1.07 billion) in the first half of its fiscal year, from September to February. Profits increased 45 percent to 11.4 billion yen for non-Japan stores in that period. 

Uniqlo posted a loss at its United States stores for that period, but analysts say the region is crucial for the company’s growth. 

“They need to have a competitive positioning in the world’s largest market,” said Masafumi Shoda, an analyst at Nomura Securities, in an e-mail. 

Unlike other low-priced international brands, like Zara, H&M and Mango, which rush fashionable items into stores weeks after trends are seen on runways, Uniqlo’s clothes are simple. There is “a strong emphasis on fabrication,” said Faye Landes, a retail analyst with Consumer Edge Research. 

Uniqlo is best known for its solid and striped basics like T-shirts, shorts and cashmere sweaters, available in a wide spectrum of colors. Uniqlo emphasizes high-tech fabric, for example, in a moisture-wicking T-shirt it sells in summer. And prices are low — T-shirts start at $9.90, and cashmere sweaters at $79.90
.
Yasunobu Kyogoku, chief operating officer for Uniqlo’s United States division, said the company was able to get prices that low because it did not change its merchandise plans based on the latest fashion fad. Instead, it books factory capacity in advance, and produces garments at a steady pace year-round, rather than rushing to produce trendy items from specialty factories. 

“Typically in retail there’s a seasonality to the products you sell and therefore a seasonality to factories — when they’re running at full capacity and when they’re not,” Mr. Kyogoku said. “To be able to balance out, over 365 days a year, full capacity, you’re able to create more efficiencies.”
After retreating from its last foray into American malls, Uniqlo took a different approach, opening a store in New York’s high-traffic SoHo district in 2006 and adding two more stores in New York last year, on 34th Street and on Fifth Avenue. The stores, filled with spinning mannequins and steel and white d├ęcor, serve in part as an advertisement for Uniqlo.

And the company almost quadrupled its spending on advertising in the United States in 2011 versus 2010, to $8.3 million, according to Kantar Media, with ads pushing its prices. With the promotions started, Uniqlo executives said it was time to re-enter malls. 

“If you have just another store in a shopping mall, there’s no reason for a customer to buy at your store because we are selling clothes, and it is not so much different from the clothes that other people are selling,” Mr. Odake said. “So unless the customer knows about your brand or what the company stands for, there is no reason for the customer to shop at your store.” 

To hit the company’s stated target of $10 billion in sales in the United States by 2020, “we need to go where the customer is, and in the United States, malls are the premier location where Americans shop,” Mr. Kyogoku said. The Uniqlo executives declined to discuss specifics about the expansion plans, beyond saying they also included stores in other big American cities. The company is also working on an e-commerce site in the United States, the executives said. 

“Even though I think it may be too early to go to mall locations,” Mr. Shoda, the retail analyst, said, the company “needs actual trials in there.”

Monday, May 21, 2012

Are We Greece Yet??

The Economic Collapse guy says what I have been saying, e.g., You cannot borrow your way out of debt.

Obama's Five Trillion Dollar Lie

Why isn't the U.S. economy in a depression right now?  The number one reason is because the federal government has stolen more than five trillion dollars from future generations since Barack Obama was elected and has used that money to pump up our grossly inflated standard of living.  Whether the federal government spends money wisely or foolishly, the truth is that the vast majority of it still ends up in the pockets of the American people who then use it to buy the things they need for their daily lives.  If the U.S. government had not borrowed and spent an extra five trillion dollars that we did not have over the past several years, we would be in the middle of a rip-roaring economic depression right now.  So any talk that Barack Obama is "improving the economy" is a total farce.  It is a five trillion dollar lie.  The reality is that Barack Obama and the U.S. Congress have been stealing trillions of dollars from future generations in order to make things tolerable in the present.  If the federal government adopted a balanced budget next year, the debt-fueled prosperity that we are currently enjoying would start disappearing very rapidly and all hell would break loose in America.

At this point, the U.S. national debt is over 15.7 trillion dollars.
When Ronald Reagan took office it was less than a trillion dollars.
If you were to divide the national debt up equally, it would come to more than $50,000 for every man, woman and child in the United States.
So the share of the national debt for an average family of four would be about $200,000.

When the government borrows and spends money that it does not have, that increases the amount of dollars in circulation and it causes GDP to go up.

That is one of the reasons why our politicians like to borrow and spend money that we do not have.  It makes the economic statistics look good.  They can point to those economic statistics as a reason to send them back for another term.

This is a major flaw in our system.  Most of our politicians do not care about how they are raping future generations financially.  Most of them just care about getting elected again.
If you will notice carefully, neither Mitt Romney nor Barack Obama are promising to balance the budget any time soon.  Like so many politicians in the past, they promise to do it "eventually", but "eventually" never arrives.

According to a recent article in the Washington Times, Mitt Romney declared during a recent campaign appearance that he has no plans to balance the federal budget in his first year....
"My job is to get America back on track to have a balanced budget. Now I'm not going to cut $1 trillion in the first year"
Why would he say that?
Why wouldn't he want to balance the budget?
He went on to explain that....
"The reason," he explained, "is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work."
Romney is right about this.  Taking a trillion dollars out of a 15 trillion dollar economy would plunge us into an economic nightmare.
And that would make him look bad.
Of course if Obama wins the election we can just expect more of the same from him as well.
For example, just check out what White House Chief of Staff Jack Lew had to say about balancing the budget recently....
“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”
Why is the time for austerity not today?
It is because the 2012 election is coming up and Obama wants the economic statistics to look good.
But can you blame our politicians for being cowardly?
Just look at what is happening in Greece.  After several years of austerity they are in the midst of a full-blown economic depression and they still have not balanced their budget.

Do we want to end up like Greece?  (emphasis added by me)


Most Americans do not realize this, but the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
So why haven't we collapsed yet?

Well, because we continue to borrow larger and larger amounts of money.
It took from the founding of America until 1995 for the federal government to accumulate 5 trillion dollars of debt.

Under Obama, we have accumulated more than 5 trillion dollars of new debt in just over 3 years.
Amazingly, Obama has added more to the national debt than George W. Bush did during his entire 8 year term.
And let there be no mistake - George W. Bush was a wild spender.  A fiscal conservative he most certainly was not.

But Barack Obama does not seem troubled by any of this.

Barack Obama is prancing about the countryside touting his great "economic plan", but the truth is that the only reason the economy has not totally collapsed is because he is stealing 150 million dollars an hour from our children and our grandchildren.

Sadly, most Americans don't understand that the current level of prosperity that we are enjoying is a grand illusion.  Most Americans still expect things to return to the way that they used to be, and they are increasingly becoming angry that it is taking so long to get back there.
In fact, a whole host of recent surveys have shown that Americans are very dissatisfied with the direction the economy is heading in....
Four recent surveys have found that on average only 28% of Americans are satisfied with the condition of the country, while 70% are dissatisfied. Three recent surveys have found that between 69% and 83% of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way.
What they don't realize is that if we were not massively ripping off our kids and our grandkids things would be much, much worse.

Thomas Jefferson understood that government borrowing is essentially the same as theft from future generations.

He once made the following statement....
And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
What we are doing to our children and our grandchildren is so immoral that it is hard to put into words.
We are running up trillions upon trillions of dollars of debt in their name just so that our lives can be more comfortable right now.

How could we be so selfish? (emphasis made by me)


The sad thing is that even with all of this reckless spending our economy is still not in great shape.
In fact, the middle class continues to shrink at an alarming rate.  The following are just a few statistics from a recent article I did about this phenomenon....

-Today, approximately 48 percent of all Americans are currently either considered to be "low income" or are living in poverty.

-Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

-The United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

-Every year now, we see millions of Americans fall out of the middle class.  In 2010, 2.6 million more Americans descended into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

-At this point, approximately 22 percent of all American children are living in poverty.

-When Barack Obama took office, there were 32 million Americans on food stamps.  Now, there are more than 46 million Americans on food stamps.

So how much worse would things be if a trillion dollars of federal spending was suddenly removed from the economy?

Are you starting to get the picture? (emphasis added by me)


As bad as things are right now, they are about to get a whole lot worse.

So why can't we just keep on borrowing and spending forever?

Well, just like Greece found out, debt always catches up with you eventually.

During fiscal 2011, the U.S. government spent over 454 billion dollars just on interest on the national debt.
But just like we are seeing in Europe, if confidence in U.S. government debt starts to disappear the U.S. government could end up facing much higher interest rates to borrow money.

If the average rate on U.S. government debt only rose to 7 percent (in the past it has actually been much higher than that), then the U.S. government would be spending about 1.1 trillion dollars a year just on interest on the national debt.

During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in about 2.4 trillion dollars.

So if we were spending 1.1 trillion dollars just on interest, that would be close to half of all the revenue the federal government brings in.

Right now, the Federal Reserve is manipulating the system in a desperate attempt to keep interest rates down.  During 2011, the Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department.

But most Americans have no idea how fragile our financial system is. (emphasis added by me)


Most Americans just assume that we will always be the greatest economy on the planet and that there is nothing to be worried about.

Sadly, one way or another this debt bubble is going to burst and then our debt-fueled false prosperity is going to disappear.

Most Americans are not going to understand what is happening and they are going to go absolutely nuts.
Here Are Two News Items That Are Really Interesting!!

Dalian Wanda Group said in a statement it had reached an agreement to acquire AMC's 5,034 screens in 346 multiplexes in the US and Canada.  AMC, based in Kansas City, MO is owned by several investment firms....
(Los Angeles Times, May 21, 2012)

The Federal Reserve gave approval last week to three government -owned Chinese banks to expand into retail banking in the U.S.
(The Week, May 25, 2012) 

What do you think will be next?
 


Sunday, May 20, 2012

Lest We Forget!!

The finances of the world are teetering on a knife edge as these words are written.  Here is the story.

Greece is heading for bankruptcy.  Money is flowing out of its banks at an incredible rate because people can see the coming bankruptcy.  Greece is facing bankruptcy because for years it has spent more money than it took in from taxes.

It used the money for an almost endless list of insanely stupid ideas.  For example, it pays hair dressers to retire at full pension at age fifty because they are "engaged in a dangerous occupation".  This list goes on.

At the same time, they pay their tax collectors so poorly that the tax collectors regularly take bribes from rich Greeks to hide their Mercedes Benz and country estates.

(Actually, if you care to do it, you can move the clock ahead and substitute USA for Greece and the story stays the same, but that is not our purpose here.)

Greece was able to hide this huge disparity between income and outgo for years and years because a Wall Street Bank had devised some financial instruments that let Greece disguise the problem until this past year.

Want to guess which Wall Street Bank did that?

You got it right!  Once again, Goldman Sachs is about to bring down the world's financial system just like they did in 2008 with their AIG stunt, which was essentially the same trick.

Now the European Central Bank will lend Greece a big bunch of money if Greece will reform its spend thrift ways.  But when the Greek government tries to enact laws to do that, the Greeks go on a ramage.

The only alternative is to withdraw from the Euro and start printing their own money.

That may force Spain, Italy and Portugal to do the same thing.  Maybe France, too??

Bye bye Europe as a unified currency block.  Bye bye cash from all European banks, except Germany, to safer havens.

And once again, Goldman Sachs and its huge bonuses, will have put the world at risk of financial disaster.

So remember what Hegel said about history, "The only thing we learn from history is that we never learn anything from history."  That old German sure got that one right!!!!!
What Do You Call People Who Eat Their Own Seed Corn??

More than anything else, the future of the U.S.A. is fully dependent upon the skills of its citizens.  And in spite of that simple fact, Congress, and most state legislatures, are falling all over themselves to cut back our investment in education.  Tom Friedman's column in today's New York Times makes this point exactly.  You need to read it.

Do You Want the Good News First?

Seattle
I’VE spent the last week traveling to two of America’s greatest innovation hubs — Silicon Valley and Seattle — and the trip left me feeling a combination of exhilaration and dread. The excitement comes from not only seeing the stunning amount of innovation emerging from the ground up, but from seeing the new tools coming on stream that are, as Amazon.com’s founder, Jeff Bezos, put it to me, “eliminating all the gatekeepers” — making it easier and cheaper than ever to publish your own book, start your own company and chase your own dream. Never have individuals been more empowered, and we’re still just at the start of this trend.
“I see the elimination of gatekeepers everywhere,” said Bezos. Thanks to cloud computing for the masses, anyone anywhere can for a tiny hourly fee now rent the most powerful computing and storage facilities on Amazon’s “cloud” to test any algorithm or start any company or publish any book. Start-ups can even send all their inventory to Amazon, and it will do all the fulfillment and delivery — and even gift wrap your invention before shipping it to your customers. 

This is leading to an explosion of new firms and voices. “Sixteen of the top 100 best sellers on Kindle today were self-published,” said Bezos. That means no agent, no publisher, no paper — just an author, who gets most of the royalties, and Amazon and the reader. It is why, Bezos adds, the job of the company leader now is changing fast: “You have to think of yourself not as a designer but as a gardener” — seeding, nurturing, inspiring, cultivating the ideas coming from below, and then making sure people execute them. 

The leading companies driving this trend — Amazon, Facebook, Microsoft, Google, Apple, LinkedIn, Zynga and Twitter — are all headquartered and listed in America. Facebook, which didn’t exist nine years ago, just went public at a valuation of nearly $105 billion — two weeks after buying a company for $1 billion, Instagram, which didn’t exist 18 months ago. So why any dread? 

It’s because we’re leaving an era of some 50 years’ duration in which to be a president, a governor, a mayor or a college president was, on balance, to give things away to people; and we’re entering an era — no one knows for how long — in which to be a president, a governor, a mayor or a college president will be, on balance, to take things away from people. And if we don’t make this transition in a really smart way — by saying, “Here are the things that made us great, that spawned all these dynamic companies” — and make sure that we’re preserving as much of that as we can, this trend will not spread as it should. Maybe we could grow as a country without a plan. But we dare not cut without a plan. We can really do damage. I can lose weight quickly if I cut off both arms, but it will surely reduce my job prospects. 

What we must preserve is that magic combination of cutting-edge higher education, government-funded research and immigration of high-I.Q. risk-takers. They are, in combination, America’s golden goose, laying all these eggs in Seattle and Silicon Valley. China has it easy right now. It just needs to do the jobs that we have already invented, just more cheaply. America has to invent the new jobs — and that requires preserving the goose. 

Microsoft still does more than 80 percent of its research work in America. But that is becoming harder and harder to sustain when deadlock on Capitol Hill prevents it from acquiring sufficient visas for the knowledge workers it needs that America’s universities are not producing enough of. The number of filled jobs at Microsoft went up this year from 40,000 to 40,500 at its campus outside Seattle, yet its list of unfilled jobs went from 4,000 to almost 5,000. Eventually, it will have no choice but to shift more research to other countries. 

It is terrifying to see how budget-cutting in California is slowly reducing what was once one of the crown jewels of American education — the University of California system — to a shadow of its old self. And I fear the cutting is just beginning. As one community leader in Seattle remarked to me, governments basically do three things: “Medicate, educate and incarcerate.” And various federal and state mandates outlaw cuts in medicating and incarcerating, so much of the money is coming out of educating. Unfortunately, even to self-publish, you still need to know how to write. The same is happening to research. A new report just found that federal investment in biomedical research through the National Institutes of Health has decreased almost every year since 2003. 

When we shrink investments in higher education and research, “we shoot ourselves in both feet,” remarked K.R. Sridhar, founder of Bloom Energy, the Silicon Valley fuel-cell company. “Our people become less skilled, so you are shooting yourself in one foot. And the smartest people from around the world have less reason to come here for the quality education, so you are shooting yourself in the other foot.” 

The Labor Department reported two weeks ago that even with our high national unemployment rate, employers advertised 3.74 million job openings in March. That is, in part, about a skills mismatch. In an effort to overcome that, and help fill in the financing gap for higher education in Washington State, Boeing and Microsoft recently supported a plan whereby the state, which was cutting funding to state universities but also not letting them raise tuition, would allow the colleges to gradually raise rates and the two big companies would each kick in $25 million for scholarships for students wanting to study science and technology or health care to ensure that they have the workers they need. 

This is not a call to ignore the hard budget choices we have to make. It’s a call to make sure that we give education, immigration and research their proper place in the discussion. 

“Empowering the individual and underinvesting in the collective is our great macro danger as a society,” said the pollster Craig Charney. Indeed, it is. Investment in our collective institutions and opportunities is the only way to mitigate the staggering income inequalities that can arise from a world where Facebook employees can become billionaires overnight, while the universities that produce them are asked to slash billions overnight. As I’ve said, nations that don’t invest in the future tend not to do well there.

Friday, May 18, 2012

One More Time..................

O.K., here is our problem, step by step.
1) 15 million Americans are unemployed.
2) 70% of all new jobs are created by small businesses.
3) Small businesses have been going out of business for a lack of customers.
4) Our infrastructure is deteriorating rapidly and that has a major cost.
5) This paragraph from last week's Economist sums up those costs about as well as you can do it.

"FOR decades America has underinvested in infrastructure—even though poor roads, delayed flights, crumbling bridges and inefficient buildings are an expensive burden. Deficiencies in roads, bridges and transport systems alone cost households and businesses nearly $130 billion in 2010, mostly because of higher running costs and travel delays. The calculated underinvestment in transport infrastructure alone runs to about $94 billion a year. This filters through to all parts of the economy and increases costs at the point of use of many raw materials, and thereby reduces the productivity and competitiveness of American firms and their goods. Overall the American Society of Civil Engineers reckons that this underinvestment will end up costing each family in the country about $10,600 between 2010 and 2020.
Yet though investment in infrastructure would bring clear gains in efficiency, there is little money around, and all levels of government are reluctant or unable to pile up more debt. Traditional sources of funding, such as the (flat) tax on petrol, have delivered a dwindling amount of revenue as soaring prices at the pump have persuaded people to drive less. The federal government has been unable to get Congress to agree on other ways to generate new sources of funding for transport, to the point where money for new highways has almost dried up."

6) Interest rates are as low as they can possibly go.
7) Every day we continue to neglect our infrastructure problems, they get more and more expensive to fix.
8) Those costs cannot be avoided forever.  They must be faced sooner or later.

So if we borrowed some money and put unemployed people back to work, it would have these advantages:

1) Reduce unemployment checks.
2) Increase income tax revenues.
3) Put money in small businesses so they could hire even more people and pay more income taxes.
4) Reduce the cost of doing business in the U.S. so there would be even more money available to create new jobs.
5) The Great Recession Ends!!!

What's to not like about that deal?  Nothing!!

So why can't the clowns in Washington see that simple fact????? 

Wednesday, May 16, 2012

Are You Really Feeling Good About Things Just Now??

Well, let me spoil that for you.  Rent a documentary from Netflix or somewhere called "Waiting For Superman".  It was made in 2010.  As you watch it, remember that at this moment, there are 600,000 jobs in the U.S. that cannot be filled because there are no qualified applicants.

The fact that this film should even be made should make you furious.

Then hope that a bus runs over Randi Weingarten and Diane Ravitch. 
Now This Is Really Interesting!!!

The New York Times is reporting on a new take on obesity in the U.S.  Remember that chronic disease is the second major factor contributing to our out of control health care costs, and obesity and diabetes are the primary chronic diseases.
Read on.......................

A Mathematical Challenge to Obesity



Carson C. Chow deploys mathematics to solve the everyday problems of real life. As an investigator at the National Institute of Diabetes and Digestive and Kidney Diseases, he tries to figure out why 1 in 3 Americans are obese. 

We spoke at the recent annual meeting of the American Association for the Advancement of Science, where Dr. Chow, 49, gave a presentation on “Illuminating the Obesity Epidemic With Mathematics,” and then later by telephone; a condensed and edited version of the interviews follows. 

You are an M.I.T.-trained mathematician and physicist. How did you come to work on obesity?
In 2004, while on the faculty of the math department at the University of Pittsburgh, I married. My wife is a Johns Hopkins ophthalmologist, and she would not move. So I began looking for work in the Beltway area. Through the grapevine, I heard that the N.I.D.D.K., a branch of the National Institutes of Health, was building up its mathematics laboratory to study obesity. At the time, I knew almost nothing of obesity.
I didn’t even know what a calorie was. I quickly read every scientific paper I could get my hands on.
I could see the facts on the epidemic were quite astounding. Between 1975 and 2005, the average weight of Americans had increased by about 20 pounds. Since the 1970s, the national obesity rate had jumped from around 20 percent to over 30 percent. 

The interesting question posed to me when I was hired was, “Why is this happening?” 

Why would mathematics have the answer?
 
Because to do this experimentally would take years. You could find out much more quickly if you did the math. 

Now, prior to my coming on staff, the institute had hired a mathematical physiologist, Kevin Hall. Kevin developed a model that could predict how your body composition changed in response to what you ate. He created a math model of a human being and then plugged in all the variables — height, weight, food intake, exercise. The model could predict what a person will weigh, given their body size and what they take in.
However, the model was complicated: hundreds of equations. Kevin and I began working together to boil it down to one simple equation. That’s what applied mathematicians do. We make things simple. Once we had it, the slimmed-down equation proved to be a useful platform for answering a host of questions.

What new information did your equation render?
 
That the conventional wisdom of 3,500 calories less is what it takes to lose a pound of weight is wrong. The body changes as you lose. Interestingly, we also found that the fatter you get, the easier it is to gain weight. An extra 10 calories a day puts more weight onto an obese person than on a thinner one.
Also, there’s a time constant that’s an important factor in weight loss. That’s because if you reduce your caloric intake, after a while, your body reaches equilibrium. It actually takes about three years for a dieter to reach their new “steady state.” Our model predicts that if you eat 100 calories fewer a day, in three years you will, on average, lose 10 pounds — if you don’t cheat. 

Another finding: Huge variations in your daily food intake will not cause variations in weight, as long as your average food intake over a year is about the same. This is because a person’s body will respond slowly to the food intake. 

Did you ever solve the question posed to you when you were first hired — what caused the obesity epidemic?
 
We think so. And it’s something very simple, very obvious, something that few want to hear: The epidemic was caused by the overproduction of food in the United States
.
Beginning in the 1970s, there was a change in national agricultural policy. Instead of the government paying farmers not to engage in full production, as was the practice, they were encouraged to grow as much food as they could. At the same time, technological changes and the “green revolution” made our farms much more productive. The price of food plummeted, while the number of calories available to the average American grew by about 1,000 a day.

Well, what do people do when there is extra food around? They eat it! This, of course, is a tremendously controversial idea. However, the model shows that increase in food more than explains the increase in weight. 

In the 1950s, when I was growing up, people rarely ate out. Today, Americans dine out — with these large restaurant portions and oil-saturated foods — about five times a week.
 
Right. Society has changed a lot. With such a huge food supply, food marketing got better and restaurants got cheaper. The low cost of food fueled the growth of the fast-food industry. If food were expensive, you couldn’t have fast food. 

People think that the epidemic has to be caused by genetics or that physical activity has gone down. Yet levels of physical activity have not really changed in the past 30 years. As for the genetic argument, yes, there are people who are genetically disposed to obesity, but if they live in societies where there isn’t a lot of food, they don’t get obese. For them, and for us, it’s supply that’s the issue. 

Interestingly, we saw that Americans are wasting food at a progressively increasing rate. If Americans were to eat all the food that’s available, we’d be even more obese. 

Any practical advice from your number crunching?
 
One of the things the numbers have shown us is that weight change, up or down, takes a very, very long time. All diets work. But the reaction time is really slow: on the order of a year. 

People don’t wait long enough to see what they are going to stabilize at. So if you drop weight and return to your old eating habits, the time it takes to crawl back to your old weight is something like three years. To help people understand this better, we’ve posted an interactive version of our model at bwsimulator.niddk.nih.gov. People can plug in their information and learn how much they’ll need to reduce their intake and increase their activity to lose. It will also give them a rough sense of how much time it will take to reach the goal. Applied mathematics in action!

What can Americans do to stem the obesity epidemic?
 
One thing I have concluded, and this is just a personal view, is that we should stop marketing food to children. I think childhood obesity is a major problem. And when you’re obese, it’s not like we can suddenly cut your food off and you’ll go back to not being obese. You’ve been programmed to eat more. It’s a hardship to eat less. Michelle Obama’s initiative is helpful. And childhood obesity rates seem to be stabilizing in the developed world, at least. The obesity epidemic may have peaked because of the recession. It’s made food more expensive.

You said earlier that nobody wants to hear your message. Why?
 
I think the food industry doesn’t want to know it. And ordinary people don’t particularly want to hear this, either. It’s so easy for someone to go out and eat 6,000 calories a day. There’s no magic bullet on this. You simply have to cut calories and be vigilant for the rest of your life. 

This article has been revised to reflect the following correction:
Correction: May 16, 2012

The “Conversation With” article on Tuesday, about Carson Chow, a mathematician who studies obesity, misstated a statistic around which his work revolves. One in 3 Americans are obese — not merely overweight, a description that applies to 2 in 3 Americans.

Tuesday, May 15, 2012

Monday, May 14, 2012

Now This Is Really Interesting!!

Given my rant yesterday about student debt and how universities are run, this article in today's New York Times is fascinating!!
 To give you some context about how universities spend money, here is a little story.  When I first started at the California State University, the Dean of the Business School has a secretary and a part time student assistant to run the school.  

When I left, twenty-five years later, enrollment had doubled and the office of the Dean had thirty-four vice-presidents, senior advisers, specialists, miscellaneous personnel.

 Read on (and remember this guy is paid over $2 Million to be the President at Ohio State.)

Slowly, as Student Debt Rises, Colleges Confront Costs



COLUMBUS, Ohio — In a wood-paneled office lined with books, sports memorabilia and framed posters (including John Belushi in “Animal House”), E. Gordon Gee, the president of The Ohio State University, keeps a framed quotation that reads, “If you don’t like change, you’re going to like irrelevance even less.”
Mr. Gee, who is often identified with a big salary and spendthrift ways, says he has taken the quotation to heart, and he is now trying to persuade Ohio State’s vast bureaucracy, and the broader world of academia, to do the same. 

At a time of diminished state funding for higher education and uncertain federal dollars, Mr. Gee says that public colleges and universities need to devise a new business model to pay for the costs of education, beyond sticking students with higher tuition and greater debt. 

“The notion that universities can do business the very same way has to stop,” said Mr. Gee, who is also the chairman of a commission studying college attainment, including the impact of student debt

College presidents across the country are confronting the same realization, trying to manage their institutions with fewer state dollars without sacrificing quality or all-important academic rankings. Tuition increases had been a relatively easy fix but now — with the balance of student debt topping $1 trillion and an increasing number of borrowers struggling to pay — some administrators acknowledge that they cannot keep putting the financial onus on students and their families.

Increasingly, they are looking for other ways to pay for education, stepping up private fund-raising, privatizing services, cutting staff, eliminating departments — even saving millions of dollars by standardizing things like expense forms.

And Wall Street is watching. 

Moody’s Investors Service, in a report earlier this year, said it had a favorable outlook for the nation’s most elite private colleges and large state institutions, those with the “strongest market positions” that had multiple ways to generate revenue. Ohio State, for instance, received a stable outlook from Moody’s last fall, though the report cautioned about the school’s debt and reliance on its medical center for revenue.
But Moody’s issued a negative outlook for a majority of colleges and universities heavily dependent on tuition and state revenue. 

“Tuition levels are at a tipping point,” Moody’s wrote, adding later, “We anticipate an ongoing bifurcation of student demand favoring the highest quality and most affordable higher education options.”
Many colleges are top-heavy with administrators and woefully inefficient, having not undertaken the kind of paring public companies did years ago — until now.

“Schools are very good at adding new things, new programs,” said Sherideen S. Stoll, vice president for finance and administration at Bowling Green State University in Ohio. “We are not so good at looking at things we have been doing for 20 or 30 years and saying, ‘Should we be offering those academic programs?’ ” 

At Bowling Green, 62 percent of graduates have debt that averages $31,515, the highest of public universities in Ohio. In addition to raising tuition, which has been limited by state-mandated caps, the university has laid off employees, encouraged early retirements, required unpaid furloughs and limited pay increases, Ms. Stoll said. The belt-tightening hasn’t yet reached the point that academic quality has suffered, she said, but Bowling Green may not be able to offer as much in the future.

“We’ve done everything and anything to try to operate much more efficiently,” she said. 

The problems aren’t confined to public colleges. Administrators at some nonprofit private institutions said they too had come to realize they could not keep raising tuition and fees. Families have become more price-sensitive since the economic collapse and are seeking deeper discounts on the sticker price. 

“We know the model is not sustainable,” said Lawrence T. Lesick, vice president for enrollment management at Ohio Northern University. “Schools are going to have to show the value proposition. Those that don’t aren’t going to be around.” 

Before the economic crisis, both public and private colleges participated in a costly “arms race” to provide better amenities to lure the best students and faculty: new dormitories with one student to a room, frequent sabbaticals for professors, upscale cafeteria food, expanded counseling services and gymnasiums that rival the fanciest health clubs in Manhattan. 

And other costs have grown, too. Health care costs have taken a toll, since colleges are labor-intensive, and so has the expense of keeping up with technology, like wireless Internet and new computers. Here at Ohio State, where tuition has increased by nearly 60 percent since 2002, there is a gleaming new student union, climbing walls that can accommodate 50 students at a time and $2 billion in construction projects under way.
Mr. Gee’s compensation package this year, moreover, is worth about $2 million, and The Chronicle of Higher Education has called him the highest-paid public university president. The Dayton Daily News recently reported that Mr. Gee had billed Ohio State for $550,000 in travel in the last two years. 

The travel expenses prompted some to question if Mr. Gee practices what he preaches. 

“He’s very capable. He’s a very smart guy, and he’s engaging and all these things,” said Dale Butland, a spokesman for Innovation Ohio, a nonprofit policy research group. But he added, “Students and their parents who are struggling, not just with coming up with the money, but paying off the debt, I think there is a disconnect between what they are being asked to do and what they are seeing the leader of the university doing.”

Mr. Gee maintains that Ohio State is getting its money’s worth. On his watch, Ohio State has become a more prestigious university, he says, while remaining a relative bargain, even with fewer resources from the state. It now receives just 7 percent of its budget from the state.
Ohio State costs about $25,000 a year for in-state residents who live on campus. The average debt for graduates who borrow is $24,480.

A lanky 68-year-old who is known for his bow ties, horn-rimmed glasses and sometimes zany antics (he has shown up, unannounced, at 21st birthday parties for his students, which he finds on Facebook), Mr. Gee has had the top job at five universities, including twice at Ohio State. He returned to the Columbus campus in 2007 after stints at Brown and Vanderbilt. Mr. Gee acknowledges that college affordability and student debt are growing problems that university presidents long ignored. He said they now needed to address them quickly. 

“We have not been as conscious about costs as we should be, and that has now come home to roost,” he said. 

Like many other college presidents, Mr. Gee has set about trying to make Ohio State’s highly decentralized bureaucracy more efficient. He said he planned to cut $1 billion from the university’s $5 billion budget in the next five years.

“We are like Noah’s Ark,” he said. “We do two of everything.”

The university saved $20 million simply by switching to common vendors for pens, copiers and overnight shipping; previously Ohio State’s 14 colleges chose their own. Creating a common expense report will save $75 million. 

“When I got here, I asked to see their long-term financial model, and they brought me a paper for one year, and I said, ‘What?’ ” said Geoff Chatas, a former banker whom Mr. Gee hired in 2010 as chief financial officer. “Now we have a 15-year plan.” 

Mr. Gee said he was considering selling off Ohio State’s airports and golf courses, and he might privatize campus parking, though faculty members are balking at the idea. Last year, Ohio State became the first public university to issue a 100-year bond, for $500 million.

He is also is trying to beef up Ohio State’s enrollment of out-of-state and international students, who bring in more tuition revenue and higher test scores. And, he is pressing alumni for more money, a task in which he is particularly skilled. 

At a ceremony to honor a $100 million donation from Leslie Wexner, the clothing magnate and Ohio State graduate, Mr. Gee choked back tears. 

“Every time I get a lot of money I cry,” Mr. Gee told the crowd. “And I got a lot of tears left.”

Sunday, May 13, 2012

Another Huge Problem Just Below The Radar!!

Student loans are now larger than all credit card debt!!  Now that is not as large as home owners debt, but it is deeply troubling for three reasons.

1)  About half of all recent graduates have no jobs whatsoever, and their ability to pay back those student loans is extremely limited.  And compound interest just makes the loan grow and grow.

2) As people (see L.A. Times story below to understand we are not just talking about people in their twenties) pay down their debts, that is money that cannot be used to buy new cars, to get married and start a family, to buy a new house, and on and on.  Remember that 70% of our economy is driven by consumer purchasing so this inability to spend is a significant drag on our recovery.

3)  Lower income students are simply being priced out of the market and won't finish college.  Since there is zero co-relation between  parent's income and IQ, we will be losing a significant resource among young people who could make real contributions to society.

So what is the real problem? The  Times story makes it clear that rising tuition and college costs are the root problem.   So what do we do about that?

Here is real source of the problem.  In twenty-five years at a public university, I have NEVER seen anyone, at the department level, school level or university level, who was willing to set priorities.  Everybody behaves like children in a sand box.  Everyone wants everything they want and they want it now.  And nobody wants to pay for anything.

One small example:  once, the state government of California awarded grants of $5 million to individual campuses to create video capabilities.  Since it had to do with electricity, the dean appointed me to a campus wide committee that was supposed to decide what to do with the money.  I sat through two meetings where the discussion ranged from what was the most advance video equipment we couldbuy to how we would assign somebody to run the whole thing.  After about five hours of this "conversation", I asked one simple question, "What are we trying to accomplish here?"  They never invited me to another meeting.  They spent the money on expensive equipment, hired a couple of people to work the equipment, and ABSOLUTELY NOTHING  was ever done with the facility.  After a couple of years, the equipment just disappeared and the two employees were let go.

While this is a trivial example, I have seen it happen over and over and over.  And I have worked at a number of universities and it is the same everywhere.

So the solution is to get accountability from a lot of children pretending to be adults.  And I have no idea whatsoever about how to do that.  Your suggestions are invited.

And now the Times story.

latimes.com

Student loan blues

More Americans can't get on with their lives because they're still paying for college years after graduation

By Walter Hamilton, Los Angeles Times
May 13, 2012
Advertisement
Brenda Small didn't think twice about taking out student loans to pay for nursing school in the late 1980s. She figured she could easily pay off the $20,000 bill — until an injury a few years later left her permanently unable to work.

Her dreams of working in her chosen profession vanished, but not her student debts. Including interest and penalties, the 59-year-old Los Angeles woman now owes more than $39,000 and can't afford to pay the debt from a disability income of $1,234 a month.

"It's just unbearable to have that type of weight on you and you can't do anything about it," Small said.

Despite the perception of educational debt as a twentysomething phenomenon, Americans of all ages are on the hook for student loans that in some cases were taken out several decades earlier. And many middle-aged people are taking out new loans as they go back to school or finance their children's educations.

Of the estimated 37 million Americans with outstanding student loans, nearly 5.5 million are 40 to 49 years old, and more than 6.3 million are 50 or older, according to the Federal Reserve Bank of New York.

"Student loan debt is now no longer isolated to young people," said Rich Williams, a higher-education advocate at U.S. Public Interest Research Group. "It's now across the board."

The burden on older people is one element of a growing debate about the effects of student-loan debt on Americans of all ages.

In addition to the often significant financial effect on students and their parents, experts worry that rising education indebtedness among all age groups has wider social implications.

"People aren't buying houses or starting families until later on and progressing on what we as a society see as the steps of life," said Radhika Singh Miller, a student-debt specialist at Equal Justice Works, a nonprofit advocacy group in Washington.

Paying for college has been on the minds of millions of parents and students in the last few weeks as incoming freshmen decided which schools they would attend.

"Many students were waiting down to the last day because costs were a big part of the equation," said Deborah Fox, founder of Fox College Funding in San Diego, which advises families on how to finance their educations.

"They were trying to get schools to add a little more money at the last minute [to an aid grant] or parents were trying to figure out a way to make it all work," she said.

The financial benefits of college still outweigh the costs, according to studies.

One found that lifetime earnings of college graduates average $650,000 more than that of their counterparts who completed only high school. Another concluded that the average annual take-home pay of college graduates is nearly twice that of high school-only graduates — $38,950 versus $21,500.

Steadily rising tuition and steep government cutbacks have pushed more students to borrow increasing amounts of money.

Two-thirds of college seniors graduated with loans in 2010, compared with fewer than half in 1993, according to the nonprofit Project on Student Debt in Oakland. Total debt loads have been rising about 5% a year, with the average graduate now on the hook for $25,250.

Last year, students took out $117 billion in new federal loans, pushing the total above $1 trillion, according to the Consumer Financial Protection Bureau.

A heavy student-debt load also weighs on decisions about careers. Celeste Knight, an 18-year-old UC Berkeley freshman, is considering becoming a social advocacy lawyer, but she worries that student loans could force her to look for a higher-paying job.

"I don't think everyone should be choosing a job based on 'Will my income be high enough to pay off my student loan?'" Knight said. "A whole generation of students is already so far in debt that even if you get a great-paying job, you're not going to live this great American standard of living."

Such concerns resonate even more acutely with older students such as Tressie McMillan Cottom.

Cottom, 34, went back to school in 2010 to get a doctorate in sociology at Emory University in Atlanta and has already racked up more than $55,000 in loans, with more than two years to go.

"We make jokes about the way it influences our life choices," she said. "My best friend said she chose her husband because he was the one without student-loan debt."

For Brenda Small, the situation is bleak. Her inability to repay her loans hangs "like a millstone around my neck," she said.

The U.S. Department of Education, which guaranteed her loans, briefly garnished part of her disability payments until a legal aid lawyer got them reinstated.

Educational debt also burdens many older Americans who took out loans to put their children through school.

Ellyn Herb, a 59-year-old San Jose psychologist and college professor, and her husband owe $132,000 on college loans they took out for their two sons. The couple have cut expenses and moved to a cheaper home but still have had to defer their loans for one son while paying off those incurred for the other.

"Many of us had kids late," Herb said. "We're headed toward retirement, but we can't retire because we have all these loans."

Unlike most other forms of debt, student loans funded or backed by the federal government are virtually impossible to discharge through bankruptcy.

The government frequently garnishes paychecks, Social Security payments and other forms of income of people who haven't paid their loans.

Yet the sluggish job market is making it difficult for many recent graduates to avoid the government's hammer.

A study released Thursday by Rutgers University showed that only half of recent college graduates are working full time.

And paychecks don't stretch as far as they used to: The 6.4% average annual rise in college costs since 1981 far outstrips the 0.4% annual income growth, according to ConvergEx Group in New York.

"Even if you do everything right, you might find it harder to pay back your loans than you thought," said Lauren Asher, president of the Project on Student Debt's parent organization.

College funding has become a flash point in the presidential election and in Congress, with lawmakers sparring over the proposed extension of subsidies that have kept a lid on federal student-loan interest rates.

President Obama and Mitt Romney, the expected Republican nominee for president, both said they oppose letting the current 3.4% rate on one type of federal loan double to 6.8% on July 1. But Democratic and Republican lawmakers are clashing on how to pay for the subsidies.

Rising costs make it even more important to make smart financial choices.

Most people should save as much as possible as early as possible, experts say, and should consider investing in a 529 college savings plan, which allows investment earnings to be disbursed tax-free for tuition and certain other school expenses.

People who have to borrow should favor federal loans, borrowing directly from the government, rather than private loans, which are made by banks or other lenders, experts say.

Federal loans have fixed rates and more flexible repayment options than private loans, which typically have variable rates.

"Rising student debt is cause for concern for a variety of reasons, but it doesn't mean you shouldn't go to college or borrow," Asher said. "But you have to shop around, borrow wisely as to what kinds of loans and how much, and know your repayment options."

walter.hamilton@latimes.com

And if you want even more, and personal, stories about this problem, try today's New York Times at this link.

 http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?_r=1&hp