I’m a great believer in the benefits of an undergraduate education when it’s done right (which is rarely). But grad school is a different matter entirely: the opportunity costs are much higher, the amount of debt involved rises substantially, and the range of jobs you can do at the end of it in many ways goes down rather than up.
If and when the Fed embarks upon its soul-searching project, it shouldn’t just look at its regulatory failures and its inability to spot or care about the housing bubble. It must also think long and hard about its culture of secrecy, which seems generally designed to further the interests of its big-bank shareholders while keeping the public as ignorant as possible.
A lot of asset-management professionals dream of one day running a hedge fund. But in the case of Maxime Carmignac, it looks more like it’s the other way around: the heir apparent to the $48 billion Carmignac Gestion fund-management empire is now running an internal $100 million hedge fund as part of her preparations for taking over from her father as CEO, CIO, or both.
Are legal payday lenders a superior alternative to the loan sharks of old? Or are they they loan sharks of old? Just look at what happened in New Mexico, which tried to crack down on payday lenders by limiting the amount of money a company could charge in interest on a short-maturity loan. No problem, said the lenders, and just started selling a new product — an even worse product — which got around the law by having a maturity of over 120 days. They even provided their borrowers with Truth-in-Lending Act disclosures! Like this one:
Megan McArdle writes that access to credit is good for the poor:
Damon Runyon didn’t just make up the crowded living conditions, the loan sharks, the reliance on pawnbrokers. Those are relics of that golden bygone era when bankers didn’t extend credit to people without solid incomes, substantial assets, or affluent relations. Fewer people got themselves into trouble with a bank, it is true. But there are a lot of worse ways to get into trouble. And as with the War on Drugs, I’m pretty strongly averse to more paternalistic policies which improve the lives of the middle class while making poorer people worse off.
There’s a reason why people are often reluctant to stand up to bullies, especially when those bullies have an enormous size and strength advantage and are credibly threatening to hurt you very badly. And so it’s going to be very interesting to see what happens now that Iceland’s figurehead president, Olafur Grimsson, has suddenly decided to cause a major international incident by vetoing a bill which would have put his country’s citizens into billions of dollars in debt to bail out the UK and Dutch governments.
The Fed is profoundly flawed, and there’s a good chance it will fail at doing the job we’re tasking it with. But it’s the best chance we’ve got. That’s the consensus I’m beginning to feel on the subject of Ben Bernanke’s status as Fed chairman specifically, and the wisdom of confirming and expanding the powers of the Fed more generally.