USA Fire Sale, 2nd Meeting, June 2009: Political capital call - Eric Janszen

[audrey_girl]

after reading this USA Fire Sale, 2nd Meeting....

hmm

guess Peter Schiff was really right after all

[Mn_Mark]

We also welcome American companies to China to build plants here. Not only do these plants supply products for export earnings but our managers learn important skills, such as how to design and build high technology products.

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past. I can understand a "goodwill" argument, where we welcome foreign students for some sort of experience here so they develop a favorable impression of us and some personal ties. But they can do that by coming here for cultural events, or by perhaps studying American history or Western philosophy or literature for a couple of semesters.

But allow them to study at MIT? For God's sake, why? Our society has invested, collectively, a tremendous amount of money and human energy in developing the science and technology that gave us such fantastic competitive (and military!) advantages over the rest of the world. We paid for that knowledge. Now we let the children of our toughest competitors, many of whom come from political traditions that are quite hostile to ours, come and sit in our classrooms to be efficiently taught for the price of a semester's tuition all the knowledge we spent billions or trillions to develop? It's crazy on the face of it. I can only assume it's based on the "kumbaya" kind of thinking that's been in control in the universities for the last 50 or 75 years that says the most important thing is being liked by the rest of the world, and they'll like us if we teach them the stuff that gives us a competitive advantage over them. Just crazy.

[metalman]

We also welcome American companies to China to build plants here. Not only do these plants supply products for export earnings but our managers learn important skills, such as how to design and build high technology products.

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past. I can understand a "goodwill" argument, where we welcome foreign students for some sort of experience here so they develop a favorable impression of us and some personal ties. But they can do that by coming here for cultural events, or by perhaps studying American history or Western philosophy or literature for a couple of semesters.

But allow them to study at MIT? For God's sake, why? Our society has invested, collectively, a tremendous amount of money and human energy in developing the science and technology that gave us such fantastic competitive (and military!) advantages over the rest of the world. We paid for that knowledge. Now we let the children of our toughest competitors, many of whom come from political traditions that are quite hostile to ours, come and sit in our classrooms to be efficiently taught for the price of a semester's tuition all the knowledge we spent billions or trillions to develop? It's crazy on the face of it. I can only assume it's based on the "kumbaya" kind of thinking that's been in control in the universities for the last 50 or 75 years that says the most important thing is being liked by the rest of the world, and they'll like us if we teach them the stuff that gives us a competitive advantage over them. Just crazy.

worse than that! they come here. we make them into the best engineers in the world. they fall in love with the usa... their college town, whatever... and want to stay, to start the next great high tech company. do we let them? no! we make them go home.

nuts!!!

[goadam1]

worse than that! they come here. we make them into the best engineers in the world. they fall in love with the usa... their college town, whatever... and want to stay, to start the next great high tech company. do we let them? no! we make them go home.

nuts!!!

If you want to fix nearly every economic ail America is in right now, allow a proper wave of immigration. Hell, give incentive to allow the best and the brightest to come. It would be better than the FIRE economy policy of looking the other way on illegal (cheap) labor.

[dummass]

If you want to fix nearly every economic ail America is in right now, allow a proper wave of immigration. Hell, give incentive to allow the best and the brightest to come. It would be better than the FIRE economy policy of looking the other way on illegal (cheap) labor.

How about this program: Serve in the US military for three years and become naturalized. Assuming you make it back from ...

http://www.hooyou.com/naturalization/class.html

[goadam1]

Service Guarantees Citzenship!

http://www.youtube.com/watch?v=SMTz9nIUkGc

[dummass]

If you see it on TV, it must be real. Another reinforced conditioned response.

http://allpsych.com/psychology101/conditioning.html

[ocelotl]

worse than that! they come here. we make them into the best engineers in the world. they fall in love with the usa... their college town, whatever... and want to stay, to start the next great high tech company. do we let them? no! we make them go home.

nuts!!!

Worse. Many are invited via head hunter based scholarships to outstanding foreign students. I know, I rejected two invitations offered in my last university year.

[flintlock]

We also welcome American companies to China to build plants here. Not only do these plants supply products for export earnings but our managers learn important skills, such as how to design and build high technology products.

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past. I can understand a "goodwill" argument, where we welcome foreign students for some sort of experience here so they develop a favorable impression of us and some personal ties. But they can do that by coming here for cultural events, or by perhaps studying American history or Western philosophy or literature for a couple of semesters.

But allow them to study at MIT? For God's sake, why? Our society has invested, collectively, a tremendous amount of money and human energy in developing the science and technology that gave us such fantastic competitive (and military!) advantages over the rest of the world. We paid for that knowledge. Now we let the children of our toughest competitors, many of whom come from political traditions that are quite hostile to ours, come and sit in our classrooms to be efficiently taught for the price of a semester's tuition all the knowledge we spent billions or trillions to develop? It's crazy on the face of it. I can only assume it's based on the "kumbaya" kind of thinking that's been in control in the universities for the last 50 or 75 years that says the most important thing is being liked by the rest of the world, and they'll like us if we teach them the stuff that gives us a competitive advantage over them. Just crazy.

Thats the whole catch with "Globalism". Without going into the pros and cons of Globalism, its obvious that there is a natural leveling of the playing field. The strongest will, relatively speaking, lose ground to weaker nations. The weaker nations have the most to gain. The Strongest, most to lose.

What we had is a system where taxpayers fund research and knowledge, and then private individuals take that knowledge and make money off it . Often to the benefit of many in that country. But now we have the benefits being sent overseas, with only perhaps a few living in the country that develped the knowledge actually benefiting.

Bottom line, workers in more developed countries are going to continue to become more irrelevant. Its just the natural progression.

[*T*]

We also welcome American companies to China to build plants here. Not only do these plants supply products for export earnings but our managers learn important skills, such as how to design and build high technology products.

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past. I can understand a "goodwill" argument, where we welcome foreign students for some sort of experience here so they develop a favorable impression of us and some personal ties. But they can do that by coming here for cultural events, or by perhaps studying American history or Western philosophy or literature for a couple of semesters.

But allow them to study at MIT? For God's sake, why? Our society has invested, collectively, a tremendous amount of money and human energy in developing the science and technology that gave us such fantastic competitive (and military!) advantages over the rest of the world. We paid for that knowledge. Now we let the children of our toughest competitors, many of whom come from political traditions that are quite hostile to ours, come and sit in our classrooms to be efficiently taught for the price of a semester's tuition all the knowledge we spent billions or trillions to develop? It's crazy on the face of it. I can only assume it's based on the "kumbaya" kind of thinking that's been in control in the universities for the last 50 or 75 years that says the most important thing is being liked by the rest of the world, and they'll like us if we teach them the stuff that gives us a competitive advantage over them. Just crazy.

Without foreign students bringing funding, top universities would not be viable financially.

You get what you pay for.

[ASH]

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past.

...

But allow them to study at MIT? For God's sake, why?

Without foreign students bringing funding, top universities would not be viable financially.

You get what you pay for.

I think it matters what level of education we're talking about. At the graduate level, attracting tuition is not the issue. In a good program, a science or engineering graduate student has a free ride, and even gets paid a small stipend to live off of. The funding angle is about talent and grants. The money comes from grants; to win grants, you need to produce results; to produce results, you need the best talent working for you. The bottom line is that America doesn't produce enough domestic technical talent to staff either its high tech industry or its academic labs. We seek out foreign graduate students because we have to, even though they cost more to support.

Have you ever watched the cartoon Futurama? This negotiation between Professor Wernstrom and Mayor Poopenmeyer is funny because it's true:

POOPENMEYER: Dr. Wernstrom, can you save my city?
WERNSTROM: Of course. But it'll cost you. First I'll need tenure.
POOPENMEYER: Done.
WERNSTROM: And a big research grant.
POOPENMEYER: You got it.
WERNSTROM: Also, access to a lab and five graduate students, at least three of them Chinese.

For my part, I'm pretty sure that our shortage of domestic science and engineering talent is cultural. It's more about our values than the resources we bring to bear on education.

[*T*]

I think it matters what level of education we're talking about. At the graduate level, attracting tuition is not the issue. In a good program, a science or engineering graduate student has a free ride, and even gets paid a small stipend to live off of. The funding angle is about talent and grants. The money comes from grants; to win grants, you need to produce results; to produce results, you need the best talent working for you. The bottom line is that America doesn't produce enough domestic technical talent to staff either its high tech industry or its academic labs. We seek out foreign graduate students because we have to, even though they cost more to support.

Have you ever watched the cartoon Futurama? This negotiation between Professor Wernstrom and Mayor Poopenmeyer is funny because it's true:

POOPENMEYER: Dr. Wernstrom, can you save my city?
WERNSTROM: Of course. But it'll cost you. First I'll need tenure.
POOPENMEYER: Done.
WERNSTROM: And a big research grant.
POOPENMEYER: You got it.
WERNSTROM: Also, access to a lab and five graduate students, at least three of them Chinese.

For my part, I'm pretty sure that our shortage of domestic science and engineering talent is cultural. It's more about our values than the resources we bring to bear on education.

I think it's both. In the UK at least, research council grad student funding is usually restricted to home (EU) students. Foreign students often have to bring their own funding via a bursary from industry or their govt.

Further, I would add that security clearance is a problem. In my field, I have a colleague (a professor at a top US university) who is applying for US citizenship because "it's hard to get funding otherwise" since in the US the funding in Eng is often defence related.

The UK produces lots of good engineering graduates, so it's not about talent or interest (at least here). However they are not able to find engineering jobs so they go (went) into finance, accounting, management consultancy etc -- where the pay and the prestige is. Despite many of them wanting to be engineers as kids. I could name a dozen of them right now.

[Munger]

I think it matters what level of education we're talking about. At the graduate level, attracting tuition is not the issue. In a good program, a science or engineering graduate student has a free ride, and even gets paid a small stipend to live off of. The funding angle is about talent and grants. The money comes from grants; to win grants, you need to produce results; to produce results, you need the best talent working for you. The bottom line is that America doesn't produce enough domestic technical talent to staff either its high tech industry or its academic labs. We seek out foreign graduate students because we have to, even though they cost more to support.

Have you ever watched the cartoon Futurama? This negotiation between Professor Wernstrom and Mayor Poopenmeyer is funny because it's true:

POOPENMEYER: Dr. Wernstrom, can you save my city?
WERNSTROM: Of course. But it'll cost you. First I'll need tenure.
POOPENMEYER: Done.
WERNSTROM: And a big research grant.
POOPENMEYER: You got it.
WERNSTROM: Also, access to a lab and five graduate students, at least three of them Chinese.

For my part, I'm pretty sure that our shortage of domestic science and engineering talent is cultural. It's more about our values than the resources we bring to bear on education.

Professor Katz is more than half crazy, but also completely brilliant. He had this to say on the topic:

Don't Become a Scientist!


Are you thinking of becoming a scientist? Do you want to uncover the mysteries of nature, perform experiments or carry out calculations to learn how the world works? Forget it!

Science is fun and exciting. The thrill of discovery is unique. If you are smart, ambitious and hard working you should major in science as an undergraduate. But that is as far as you should take it. After graduation, you will have to deal with the real world. That means that you should not even consider going to graduate school in science. Do something else instead: medical school, law school, computers or engineering, or something else which appeals to you.

Why am I (a tenured professor of physics) trying to discourage you from following a career path which was successful for me? Because times have changed (I received my Ph.D. in 1973, and tenure in 1976). American science no longer offers a reasonable career path. If you go to graduate school in science it is in the expectation of spending your working life doing scientific research, using your ingenuity and curiosity to solve important and interesting problems. You will almost certainly be disappointed, probably when it is too late to choose another career.

American universities train roughly twice as many Ph.D.s as there are jobs for them. When something, or someone, is a glut on the market, the price drops. In the case of Ph.D. scientists, the reduction in price takes the form of many years spent in ``holding pattern'' postdoctoral jobs. Permanent jobs don't pay much less than they used to, but instead of obtaining a real job two years after the Ph.D. (as was typical 25 years ago) most young scientists spend five, ten, or more years as postdocs. They have no prospect of permanent employment and often must obtain a new postdoctoral position and move every two years. For many more details consult the Young Scientists' Network or read the account in the May, 2001 issue of the Washington Monthly.

As examples, consider two of the leading candidates for a recent Assistant Professorship in my department. One was 37, ten years out of graduate school (he didn't get the job). The leading candidate, whom everyone thinks is brilliant, was 35, seven years out of graduate school. Only then was he offered his first permanent job (that's not tenure, just the possibility of it six years later, and a step off the treadmill of looking for a new job every two years). The latest example is a 39 year old candidate for another Assistant Professorship; he has published 35 papers. In contrast, a doctor typically enters private practice at 29, a lawyer at 25 and makes partner at 31, and a computer scientist with a Ph.D. has a very good job at 27 (computer science and engineering are the few fields in which industrial demand makes it sensible to get a Ph.D.). Anyone with the intelligence, ambition and willingness to work hard to succeed in science can also succeed in any of these other professions.

Typical postdoctoral salaries begin at $27,000 annually in the biological sciences and about $35,000 in the physical sciences (graduate student stipends are less than half these figures). Can you support a family on that income? It suffices for a young couple in a small apartment, though I know of one physicist whose wife left him because she was tired of repeatedly moving with little prospect of settling down. When you are in your thirties you will need more: a house in a good school district and all the other necessities of ordinary middle class life. Science is a profession, not a religious vocation, and does not justify an oath of poverty or celibacy.

Of course, you don't go into science to get rich. So you choose not to go to medical or law school, even though a doctor or lawyer typically earns two to three times as much as a scientist (one lucky enough to have a good senior-level job). I made that choice too. I became a scientist in order to have the freedom to work on problems which interest me. But you probably won't get that freedom. As a postdoc you will work on someone else's ideas, and may be treated as a technician rather than as an independent collaborator. Eventually, you will probably be squeezed out of science entirely. You can get a fine job as a computer programmer, but why not do this at 22, rather than putting up with a decade of misery in the scientific job market first? The longer you spend in science the harder you will find it to leave, and the less attractive you will be to prospective employers in other fields.

Perhaps you are so talented that you can beat the postdoc trap; some university (there are hardly any industrial jobs in the physical sciences) will be so impressed with you that you will be hired into a tenure track position two years out of graduate school. Maybe. But the general cheapening of scientific labor means that even the most talented stay on the postdoctoral treadmill for a very long time; consider the job candidates described above. And many who appear to be very talented, with grades and recommendations to match, later find that the competition of research is more difficult, or at least different, and that they must struggle with the rest.

Suppose you do eventually obtain a permanent job, perhaps a tenured professorship. The struggle for a job is now replaced by a struggle for grant support, and again there is a glut of scientists. Now you spend your time writing proposals rather than doing research. Worse, because your proposals are judged by your competitors you cannot follow your curiosity, but must spend your effort and talents on anticipating and deflecting criticism rather than on solving the important scientific problems. They're not the same thing: you cannot put your past successes in a proposal, because they are finished work, and your new ideas, however original and clever, are still unproven. It is proverbial that original ideas are the kiss of death for a proposal; because they have not yet been proved to work (after all, that is what you are proposing to do) they can be, and will be, rated poorly. Having achieved the promised land, you find that it is not what you wanted after all.

What can be done? The first thing for any young person (which means anyone who does not have a permanent job in science) to do is to pursue another career. This will spare you the misery of disappointed expectations. Young Americans have generally woken up to the bad prospects and absence of a reasonable middle class career path in science and are deserting it. If you haven't yet, then join them. Leave graduate school to people from India and China, for whom the prospects at home are even worse. I have known more people whose lives have been ruined by getting a Ph.D. in physics than by drugs.

If you are in a position of leadership in science then you should try to persuade the funding agencies to train fewer Ph.D.s. The glut of scientists is entirely the consequence of funding policies (almost all graduate education is paid for by federal grants). The funding agencies are bemoaning the scarcity of young people interested in science when they themselves caused this scarcity by destroying science as a career. They could reverse this situation by matching the number trained to the demand, but they refuse to do so, or even to discuss the problem seriously (for many years the NSF propagated a dishonest prediction of a coming shortage of scientists, and most funding agencies still act as if this were true). The result is that the best young people, who should go into science, sensibly refuse to do so, and the graduate schools are filled with weak American students and with foreigners lured by the American student visa.

Sad but true.
http://wuphys.wustl.edu/~katz/scientist.html

[jk]

Again, our interest is only in purchasing as many short term Treasury bonds as necessary to maintain the purchasing power of our current dollar holdings and to manage our exchange rate as we see fit.

i don't think the chinese will continue to have this option for very long. as chinese exports to the u.s. are constrained by the u.s. recession, and as the u.s. need to borrow grows for the same reason, the chinese flow of new dollar income will become simply inadequate to the task.

[*T*]

Professor Katz is more than half crazy, but also completely brilliant. He had this to say on the topic:

...

Sad but true.
http://wuphys.wustl.edu/~katz/scientist.html

Very, very familiar. Unfortunately true in the UK too.

[moan] Science for me is a compulsion, not a career [/moan]

[Sapiens]

We also welcome American companies to China to build plants here. Not only do these plants supply products for export earnings but our managers learn important skills, such as how to design and build high technology products.

I don't understand the logic of allowing foreign students to attend our engineering, business, or other schools where they can learn the distinctive knowledges that have given us our competitive advantage in the past. I can understand a "goodwill" argument, where we welcome foreign students for some sort of experience here so they develop a favorable impression of us and some personal ties. But they can do that by coming here for cultural events, or by perhaps studying American history or Western philosophy or literature for a couple of semesters.

But allow them to study at MIT? For God's sake, why? Our society has invested, collectively, a tremendous amount of money and human energy in developing the science and technology that gave us such fantastic competitive (and military!) advantages over the rest of the world. We paid for that knowledge. Now we let the children of our toughest competitors, many of whom come from political traditions that are quite hostile to ours, come and sit in our classrooms to be efficiently taught for the price of a semester's tuition all the knowledge we spent billions or trillions to develop? It's crazy on the face of it. I can only assume it's based on the "kumbaya" kind of thinking that's been in control in the universities for the last 50 or 75 years that says the most important thing is being liked by the rest of the world, and they'll like us if we teach them the stuff that gives us a competitive advantage over them. Just crazy.

People tend to forget why they do things, the U.S. used to allow the best and brightest into their schools to gain "brains" as those students tended to stay put in the U.S., that is no longer true.

From time to time I like to recall the little story at the beginning of this sermon when I see someone doing something that does not make sense:

http://www.crossties.org/sermons/indiv/sermon19.pdf

[jiimbergin]

People tend to forget why they do things, the U.S. used to allow the best and brightest into their schools to gain "brains" as those students tended to stay put in the U.S., that is no longer true.

From time to time I like to recall the little story at the beginning of this sermon when I see someone doing something that does not make sense:

http://www.crossties.org/sermons/indiv/sermon19.pdf

Thanks for the link. I enjoyed the sermon. It certainly shows both the positives and negatives of traditionalism.

jim

[metalman]

after reading this USA Fire Sale, 2nd Meeting....

hmm

guess Peter Schiff was really right after all

you think she's writing about peter?

Investment Funds: Should You Hear Alarm Bells? by Janet Tavakoli

Editor’s Note: Janet Tavakoli is the president of Chicago-based Tavakoli Structured Finance and the author of Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street.

Even Warren Buffett will try to buy an investment fund when the price is right, but it rarely is.

Buffett tried to buy Long Term Capital Management (LTCM), a hedge fund that famously blew up in the late 1990s, but the Federal Reserve Bank, the U.S. central bank, organized a bailout instead. LTCM’s management was honest but unlucky. Lately, we’ve heard a lot about hedge funds and other types of investment funds that have been both unlucky and dishonest.

The overwhelming majority of these managers are men, because the world of finance is dominated by men. A woman can feel at a disadvantage, but when dealing with the wrong crowd, even savvy, male money managers sometimes feel at a disadvantage. How can you tell if you should be worried?

These nine warning signs alarm the savviest money managers in the world:

• A cult figure. If the manager is a cult figure and has no independent third party that verifies his returns, you are probably already in trouble. Do-it-yourself reporting doesn’t cut it when it comes to your money.
• The fund can hang onto your money. This is known as a “gate.” If the fund manager can prevent you from withdrawing your money, or if the fund manager can change the rules later to prevent you from withdrawing your money, you need a very good explanation why this is necessary. (Sometimes there is a legitimate reason for this, such as in a real-estate partnership, but it is rare.) If you invested in the stock market, you can get your money anytime you want, even if you have lost money — it is your decision. Yet, money managers with poor performance will tell you that you cannot have your money back and it is for your own good: The fund’s value has taken a beating; if you sell now you will get a lousy price; hang on and things will get better. This may be true, but it is also possible value has been permanently destroyed due to an investment mistake, or worse, the money is missing. In any case, it is your money, and you should decide when you get it back and how much of a loss you are willing to take. Do you want to trust the judgment of someone who has just proven he has misjudged the market?
• No-name banks and accountants. It is bad practice if a manager does not separate the investment funds from his other accounts in a custodial account with a well-known bank. He should also have a credible auditor from a large, well-known accounting firm.

• Poor transparency. It is so hard to tell what you are invested in that your money manager might as well be wearing a flannel nightgown.
• No visible risk controls. If you ask how your manager is controlling the risk and you don’t get an answer you can understand with some proof to go along with it, then your manager probably isn’t managing anything; he’s probably manipulating you.

• Lots of borrowing. In the business this is known as “leverage” or “gearing.” This is just a fancy way of saying I put down only a fraction of the purchase price. If you bought an uninsured car and put 20% down, you don’t want to take it for a spin on New Year’s Eve unless it is armor-plated. Most financial assets in this crazy financial environment don’t have that kind of protection, and when you invest in a fund, you don’t have any insurance. In fact you are the insurance. If you have the equivalent of 20% down (5 times leverage), if your car takes more than 20% damage, you are wiped out. Your money disappears faster than a car in "Gone in 60 Seconds."
• A single strategy. If your fund’s performance is dominated by one strategy, you should worry. One type of investment strategy does not fit all markets. If you know you are making a bet on, say, buying stocks paying high dividends — some of which will have a high chance of being wiped out — go ahead. But don’t pretend it is a long-term investment, when it is actually a bet.
• Unlimited expenses. Most funds have a cap on expenses, plus management performance fees. Ask your manager where you can find this information in your documents. Do not take his word for it.
• Won’t answer questions. When you are about to give (or if you have given) your money to someone else to manage, any question is a reasonable question. If your manager seems too cocky, patronizes you or answers your questions with jargon, you are being mistreated. If your manager responds with irritation, anger or condescension when you ask for clarification, it is a red flag. That said, the most dangerous cat you will ever meet in life is the false leveler, the charming manager who seems to answer your questions, but in reality he is softening you up. He may be charming his way to get into your pockets (instead of your pants). Don’t fall for it.

[flintlock]

you think she's writing about peter?

Ok mister Red Herring, that doesn't address whether Schiff was right or not.

[metalman]

Ok mister Red Herring, that doesn't address whether Schiff was right or not.

right about what? the dollar crashing last year? no.

about it crashing in the future? i doubt it.

this makes more sense to me... they support the dollar as needed with short term debt while diversifying out of dollars... use long term debt as collateral... set up currency swaps... etc...

what's the motto here... 'a process not an event'.

chart from part ii...



the dollar's been 'crashing' since 1971.

the pound sterling didn't 'crash' and lose reserve status overnight, either. process took decades, too...