Assorted links

1. It is far from obvious that he is wrong.

2. Big data on campus.

3. One look at our deepest structural problem (no recession for college grads, terrible job market for others).

Those three links are enough to think about for the entire day and more.


Could anyone with an ft subscription summarize what bad things are going to happen?

Hugh Hendry, who manages Eclectica a UK hedge fund that has decent returns, over 10% compounded for 10 years and was up 30% in 08, and says he is not a contrarian but is definitely a pessimist as well as a person who talks a lot on the record, says that US Treasury yields will continue to fall, a financial crash will occur, he has no use for i-banks and their hedge fund marketing machines, France will nationalize its banks in the next year or so and the next few years will resemble the 30s but then one will have the investment opportunity of a lifetime.

He does not make clear what policy environment he assumes. Presumably whether France nationaizes its banks within a year might have something to do with what ECB's ngdp target is.

Aren't those the kinds of returns Madoff claimed to produce year after year?

mark, I would like to subscribe to your summary service.

I believe you don't need a subscription to FT to see the article. You merely have to register (a waste of a few minutes) and then you get to see articles, but I think you are limited by amount of articles per month.

mark summed up the article well though so you don't really need to register this time around....

P.S. he is also in the camp of people that think China has a bubble that he is betting will burst or is bursting.

Still enough of a barrier to be a flat "no" for me and various others (Do they really think registration gains them anything other than a way to send me stupid emails I'll hate? And that I don't know that's the only reason they want my information?).

Looking at the URL itself (""), it's obvious that FT has no idea how this "web" thing should work.

A GUID, followed by a line-noise fragment ID?

That's a nightmare for human comprehension, and completely fragile, offering no clue whatsoever what it linked to if their URL scheme changes in a year and old links fail.*

Active user-hostility means that no matter how good their content might be, it won't be viewed.

(* Compare to this very site's URL for these comments: "".

It lets one tell what the link was from, when it was published, and at least some idea what the content was - admittedly not so useful in an assorted links post, but at least you know it WAS assorted links.

That's good URL design.)

You don't need the subscription...just find the page on google (using the title) and see the 'cached' page.

The third link does not imply that there is no recession for college grads, just that the recession has not been nearly as horrible.

Still further, it doesn't show the non-degree employment before the bubble - housing employed a LOT of the non-degree holding folks. To me, it is no surprise at all that the miss-allocated capital should find itself with lower returns after the market discovery process. I wonder what the deviation of the change in employment looked like during the bubble... I know that at least one sector was employing above trend (Yes, I know that statistical trend is not economically meaningful in a generalizable way. But large deviations do provide room for a story).
(From Ed Leamer "Macroeconomic Patterns and Stories"

Sorry links don't work. They can be copied and pasted though.

Wolfers argued that the third link demonstrated that there has been no recession for college grads, but the chart by itself cannot demonstrate that. It only shows the absolute number of employed college grads vs non college grads, not the relevant proportions of total college grads employed. If the Department of Numbers' data is to be believed, there has been a recession for college grads, it simply wasn't as severe:

Don't think BLS has it, but it would be nice to see the breakout for those with graduate or professional degrees as well and see the effect of the recession on those groups.

Agreed, it would be interesting to see if there's much of a difference between graduate vs bachelor's.

I heard in January that the unemployment rate for recent math PhDs skyrocketed during the recession to almost 4%!

That being said, unemployment doesn't capture all economic losses due to the recession. Underemployment is likely a bigger issue for those with college degrees. I doubt the barista across the street - likely with a BA or MA since this is Washington, DC - considers themselves employed at $9 an hour.

I bet you the unemployment rate for new JDs or straight from undergrad MBAs probably has much lower employment than the national average.

As for college degree in general, I graduated in 2009 and at least half my class is still unemployed or way underemployed. This stuff about college degrees being recession proof is bullshit.

A lot of those college grads are probably filling positions that don't require a college degree, and would normally go to high school grads if the job market was tighter. I don't see that as evidence that the problem is structural, just that companies are hiring the most qualified candidates for a given position.

This. So either employers prefer college graduates to non-college graduates or the number of jobs requiring a college education increased and the number of jobs not requiring a college degree decreased? My understanding is that the fastest growing occupations include jobs in the retail, food service and hospitality industries, few of which require a college education. This would tend to suggest that the first possibility -- that college grads are outcompeting non-college grads for jobs -- is the better explanation.

It's a huge success! The college grads got jobs that someone without a junior high education can do, and now can use their 8 dollars and hour to pay off thousands of dollars in student loans off.

But Cowen will keep up writing apologetics for the educational industry scam.

It is far from obvious that he is wrong

You statement is far from committal, and very near the cross streets of pointless and senseless, abutting the content-free zone.


CNBC reprint of FT article, should be viewable by all

This seems to be the relevant part:

"“We have reached a profound point in economic history where the truth is unpalatable to the political class — and that truth is that the scale and magnitude of the problem is larger than their ability to respond — and it terrifies them" ... He believes that financial markets are single-digit years away from a crash that will present investors with opportunities of a lifetime. “Bad things are going to happen and I still think the closest analogy is the 1930s.”

He's more optimistic on the US compared to the BRICs, though.

2 is basically saying "we believe computers are better at being human than humans are." It scares me that people are thinking like this; it scares me more that they might be right.

Or, let's let computers focus on what they are good at while we do the same. Comparative advantage.

#3 shows a structural problem, but of course you need a different graph to show "no recession for college grads." Headlines claim high rates of unemployment for recent college graduates. "The employment rate for recent law-school graduates has fallen to its lowest level since 1994 ..." etc.

There is one very, very true statement in the Hendry article (which is otherwise entirely without insight or value): "...when I speak in person, ... it gives the impression that I am ... full of myself"

On #1, it is far from obvious what you are trying to link to for unregistered users, if you don't log in you get sent back to the FT front page.

If you DO login (I happen to have registered) you get an article: Hendry – ‘Bad things are going to happen’

While these three links may be all one needs to think about, as a palate cleanser, I highly recommend Macro Man's post on
"The 2012 Financial Olympics".

Super! I like these in particular:

Gymnastics - China have always excelled at this and their program this year looks to be the most creative yet with a completely new set of figures dreamed up especially for the event.

High Jump - Apple. Always beats the bar by a clear margin.

Kayaking - The Greek team have excelled throughout the past 3 years, navigating the most extreme of rapids. Experts are left amazed that they are still afloat at this point in the competition despite their leaky craft, complete lack of leadership and large debts.

(no recession for college grads, terrible job market for others).

I do not understand this statement. Isn't true the 50% of college grads are taking jobs that do not require a college degree?

I expect employers when given a choice between college grads and non college grads to take the college grads even if the job requires no education at all.

I think it would be more interesting to see the effects of the recession on recent college grads compared to those with 10 years of experience, and so on.

Floccina: Some employers don't want to hire overqualified people who will jump ship at the earliest opportunity.

The unemployment rate for college grads went from under 2% to 5% and is now around 4%.

For those without a high school diploma it went from under 7% to over 15% .and is now at 12.6%

So in percent terms the jobless rate for college grads rose more that the jobless rate for high school dropouts --150% vs .%114

Are you better off with no job and just going on government benefits (high school dip)? Or with a low-paying, non college required job with thousands of dollars in non-dischargable student loan debt to pay off (college grad)?

A very good illustration of how statistics can be misleading.

"One look at our deepest structural problem (no recession for college grads, terrible job market for others)."

Thank God we let in all those illegal aliens! Where would we be without their children, who all go to Caltech?

It's about time you started focusing on immigration, Steve!

Saying "college grads" are underemployed or have jobs not requiring a degree are thinking too abstractly.

College degrees have different majors, so the question should be which college degrees are proving to be of the least value?

We have encouraged young people to go to college and get major in a subject that they enjoy with no consideration of the employment prospects of that degree or the prospects of being able to pay off their student debt after they graduate. Just as they have chosen a degree with little value their argument of underemployment holds little values.

Take a count of majors and their unemployment numbers and it will tell a different story.

I have a double Masters in sociology and Eskimo studies. Would you like some fries with that?

1. Fix the bankruptcy system NOW. The real crisis is before us not behind us.

Fix the bankruptcy system?
How about we allow student debts to be discharged, but you have to give your degree up?
That would lead to heaps of employed people suddenly losing their degrees, and would fix that structural problem in a jiffy!

"How about we allow student debts to be discharged,"

Interesting, but why not just stop there. Put the financial responsibility on the finance experts and the education responsibility on the educators. It's pretty rich that the one debt you can't discharge is the one the government subsidizes for people to tell you how to get gainful employment.

The employment graph is misleading because its scales are all screwy. A one-line rise for college grads is about a 5% increase, while a one-line drop for non-college grads is a .8% drop. In total, a 5% increase in the number of employed college grads (in absolute terms) and a 5% decrease in non-college grads employed.

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