Posts tagged money
College Loans – The Future of American Education
Nov 21st
I speak from experience. I went to college for Electrical Engineering. It cost, in all, about $120,000. Paying back that amount of money requires a substantial income. The income must cover the bills first. It must cover the car lease, which is $150 per month. The car insurance, which is ~$200 per month. It must cover the health insurance, which is $250 per month. It must cover the cell phone bill, which is $150 per month because I pay for my parents phones that are on my account. It must pay for gas, which is about $100 per month. It must cover food, which can be upwards of $250-300 per month. All in all this translates to $1,125 per month. And this is not including rent, and I’m lucky that I live at home!! Rent, unless you are sharing a room with a roommate, can be hundreds of dollars a month.
Ok, I understand that college loans are the gateway to an education; but what is the ultimate goal of that education? If we lived in a social society; ie… socialism, then the education would be for a job to contribute to society. But no, we live in a capitalistic society, where the whole point of education is for yourself. Capitalism, in its nature is cut throat. Everyone is out for themselves. Therefore the $120,000 loans must be repaid, and from the perspective of the loaners the money must be paid back quick. Therefore would you not think it is in the best interest of the companies, that issue college loans, to get the student a well paid job subsequent to their college experience? No, the loaners do not do anything. They just want to get paid. They do not help, and neither does the college. How can a college ask for such money, and then expect it to be paid by an entry level employee making $25,000 per year. 25k per year is about $1400 a month. If that kids bills are $1,125 just to live at home that kid has $275 per month to pay the loan. This kid will have no savings what so ever until the loan is payed off. Lets say times are tough; for example right now in America as of 11/21/2009. Jobs of a high salary most likely won’t be around for some time. The kid will work the current salary for 5 years. That means in five years the kid will have paid $275 times 60 months. $16,500 will be paid over that five years. The kid will still have over $100,000 to pay off. If the kid never gets a better job then he will be paying his school loan for 36.36 years. YES 36.36 years. Incredible what a college education gets you. Imagine that you went to school, costing $120,000, and it was for an English undergraduate degree. You never pursue a masters or PhD. You never want to become a teach, but you still have the college degree and the debt. You will be working for 36.36 years to pay that debt, and you will never have any savings what so ever toward retirement. You will be over 50 years old with nothing in the bank, and you will still be living at home!!!!!!!!!!!!!!!!!!!!!!!!!
Now, $25,000 is a lot of money. Compared to the rest of the Americas 25k is tremendous. In Mexico the minimum wage is about $4.25 per day. Therefore in Mexico the average worker make about $1000 USD per year. This would take 25 years to make. Therefore a worker in the us making 25k a year, makes 25x (times) the salary of an average Mexican worker. Clearly the situation is complex, and fucked up from a variety of aspects. On one hand 25k a year is a mind boggling amount of money, on the other hand, in the US you will be living at home until you are over 50 years old, with no savings, and a useless college education stamped on a $120,000 piece of paper.
Where is everything going? Where is the economy heading? There is a lot of money in this country, but there are many things to consider. One would image that having a college education should dictate a high salary than the average American. It no longer guarantees this. A college education has become the status quo. It has become a high school diploma. You must have one, but it doesn’t really help unless your comparing yourself with someone that does not have one. Years, maybe decades ago $25,000 a year jobs were for lucky high school graduates. Nowadays the high school graduates are shit out of luck (SOL). The jobs are going to student with bachelors degrees that have been out competed with regard to a 50k job.
So how about that college loan? Was it worth it? Will it be worth it? Will you be the lucky one to get a reasonable job to pay off your loan before you turn 50? Will you have savings? Will you be living at home for way too long?
Will companies issue college loans help out the students? Shouldn’t it be an obligation to help the student get a job to pay their loan? How are people paying these huge loans? I consider myself a relatively conservative person, very much unlike most Americans. A typical college graduate wants to spend money, buy things, and have stuff. What do the loan companies do when no money is paid at all? I would imagine this is the case for millions, if not billions of dollars in loans given each year. How are people paying back loans given the lack of jobs?
What will happen? Where is this country heading?
The Great Disparity – Another Inevitability
Nov 15th
Based on the ideas I present in The Great Inflation, comes the idea of the great disparity.
American shoppers are splitting again: The affluent are finally starting to buy, picking up designer clothes at places like Nordstrom, while those on the lower economic rungs are still scrimping by, heading to Walmart for the basics.[Source]
This will get worse, and worse and worse. The middle class, and the poor are completely dependant on jobs to make money. The lucky middle class, and poor have job wages that are continually decreasing if not remaining the same.
There is a certain amount of inflation that happens every year. Based on this website the rate of US inflation is 2.5% +- .5%. This means that each year an employee must make 2.5% more money in order to have the same value of income as compared to the previous year. This is clearly not happening, wages are the same if not decreasing!!! Because of this each and every year more and more middle class people are becoming relatively poor. I say relatively poor because even the poor people in this country are extremely wealthy!!; compared ot the poor of other countries (digression, but true).
The rich will always be rich because their money is in the form of an investment. Something that will increase in value as a rate greater than inflation. Because of this the vast majority of rich people are completely immune to inflation. The great disparity will come as the middle class, and the “relative poor” succumb to the inevitability of increased inflation.
The only way the middle class will grow stronger is to experience increased wage, or the available of new forms of employment at a higher wage. Education does not help. I have a 120,000$ Electrical Engineering degree. It does not produce income at or even near that dollar amount.
The Pacific Garbage Path – 2x the size of Texas
Nov 14th
Light bulbs, bottle caps, toothbrushes, Popsicle sticks and tiny pieces of plastic, each the size of a grain of rice, inhabit the Pacific garbage patch, an area of widely dispersed trash that doubles in size every decade and is now believed to be roughly twice the size of Texas.[Source]
The five garbage patches around the world are growing. Its quite a spectacle of humanilty that we consume so much that the waste needs to be burried in landfills and is left to float in the oceans. We as a species cannot deal with our own waste products. Clearly it is not a sustainable practice, and the great pacific garbage patch will continue to grow. Obviously nothing will be done about it; it will cost money to do something about it, and companies will not pay to throw away garbage. Hey its not our problem, its the oceans problem.
Humanity will have to change significantly, emotionally, to even consider cleaning up these natural habitats. Its garbage was 10 feet high in NYC, I’m pretty sure the government will pay to clean it up. But the emotions of spending money on something that does not directly effect us, and something that we do not see, is too difficult to overcome. The emotions of monetary loss, and not being able to spend the money on ourselves prevents anything from being done. Its really ugly, and its huge. The big one in the Pacific is twice the size of Texas. Garbage! Fish and other marine life use it as a habitat, but ultimately the vast majority of the trash produces toxic emissions, especially when broken down by the corosive salt water. Other material gets injested, contributing toxic pollutants to an important source of food.
A Breakdown of Healthcare
Nov 9th
Healthcare boils down to a simple situation. For the average working american, that puts in most likely over 40 hours per week, the cost of healthcare is expensive. The over $200 dollars per month for the Healthy New York plan, with Blue Cross Blue Sheild, can be upwards of 20-25% of a net months income. It is expensive for the customer, and sometimes the customer will want to forgo insurance to make a relative increased salary of 20-25%. Hey 20-25% is a lot of money. Then if something happens to the person they go to the emergency room and the government picks up the tab for free.
The other end of the system is the amount of money a doctor wants to get paid. If insurance wants to pay a doctor less money rather than more, the doctor will be unhappy and might not accecpt that particular insurance plan. But we want the doctor to be happy, they are providing care for our health. Therefore we would want our insurance companies to pay the amount of money the doctor wants to provide a particular treatment. Quite a dilema in an age when everyone wants to save money, which ultimately translate into paying doctors less.
The problem lies in doctors that want to make large amount of money to provide their services. Doctors needs to be in the industry because they want to help people. If they are in it only for the money then the health care problem will only get worse, because they will only want more and more money. The problem is systemic. Many people go to school to be doctors only for ther money, but they shouldbe encouraged to go to help people, understanding the a primary problem with health care is the overdesire for monetary compensation.
Although it could be argued that doctors should get paid large amounts of money. But that cost will ultimately come out of the pockets of working Joes that are having trouble paying the bills as it is.
The problem is systemic and I don’t see a particular solution. The only way to resolve the situation is demanding a moral standard of upcoming doctors. They have to desire to help without with wanting huge compensation. But then we have to consider the 250-500 thousand dollars most doctors pay to go to med school. That is simply a huge number.
Once again I don’t see a particular soluation at this time to ensure that people are getting the best of quality care, for the lowest price possible. Frankly is seems like a contradiction.
The Inevitable Great Inflation
Oct 31st
This is an inevitability.
The United States printed more money for this bailout than any other time in history. No other country, for all of human history has done what America has done. Trillions, upwards of 10 trillion, possibly more has been printed. This is in addition to the 800 billion or so used of taxpayer dollars. This has created a debt, more than than any country in the history of the world. To pay for this debt the US has issued treasuries, bonds, and other loans to compensate. These loans will only pay back a portion of the debt created, and the rest of the borrowing will have to be payed with TAXES.
For the loans to payback the debt interest rates will need to be raised. They will need to be raised at least to preceding hights, if not higher. Were talking 15-30% or more. Right now interest rates are at 0%. The zero percent interest rate is to help stimulate the economy, allowing companies to borrow money and only pay back the exact amount that was borrowed. The effect of the 0% interest rate is wearing off, and is no longer stimulating growth. The debt is still there, and if businesses are not paying more taxes, and people aren’t buying more things (sales tax), the government will not be able to meet the tax income necessary to pay the bills. The only way to compensate is to raise taxes, and to begin to raise interest rate to increase income. This is inevitable.
What will happen when interest rates rise? Loans will become less interesting. Who will take out a million dollar loan having to pay back one million three hundred thousand dollars? How about a corporation taking out a ten billion dollar loan? This will seriously stifle business growth. What about Rite Aid borrowing money for the products on their shelves? Product supplies like Rite Aid for example, will still have to borrow the money to have the products on their shelves; and to compensate the prices of their products will rise accordingly. This effect will happen for ALL products and services.
This is the great inflation. All products and services will dramatically inflate in price. Salaries will remain the same; I don’t see congress raising minimum wage, do you? Therefore people living paycheck to paycheck will be making the same amount of money but everything else will substantially increase in price. The middle class will be significantly pused toward the poverty level, the poor will remain poor, and the rich won’t know the difference.
Two issues come to mind. The povery line is a crazy notion in the US. Poverty in the US is not povery as compared to the rest of the world. A person making minimum wage in the US is most likely in poverty. But a person making minimum wage in the US is making incredibly more money than a person from all of south and central America. In south and central America the minimum wage is much less than $5 per day!!!! Therefore a person in povery in the US is relatively not in povery compared to over a billion people in central and south American. This does not take into account povery in India, and China. Their minimum wages are even lower!!! Cents per day!!! Maybe 50 cents. So overall the US has a lot of inflation that can occur and even the poorest of Americans will still be much richer than the poor people of 2/3 of the rest of the world!!
The other issue is the rich. Rich people will benifit beyond belief from a tremendous inflation. If a 30% interest rate comes about, then a family with 10 million in the bank will be making 3 million 300 thousands dollars a year all with FDIC insurance. Their money is guaranteed along with their interest rates. This is scary. The rich are protected from the scariest aspects of inflation.
From the great inflation will come the great disparity. As stated above the poor will be poor, the middle class will become poorer, and the rich won’t notice the difference. The middle class in the US is on the way out. They are on the decline, and will be pushed into poverty. The immediate future of the US is the possible elimination of the middle class.
This is the direction that the US is going. This is pure logic, and rationality, this is scary.
