So a number of people including relatives, have emailed me to see what I thought about the House vote yesterday.
If you read my commentary at LRC, Mises or AWC it probably is no surprise that I’m against the bailout. Here are two resources I think help explain the situation the best:
As far as the boilerplate that we all have been subjected to, there really is no credit crisis per se.
The firms that have terrible credit ratings only have themselves to blame for using the charge card — no one forced them to loan potential homeowners money or to buy risky assets. Or rather, to the dismay of the banking establishment, the credit markets are doing what they are supposed to: lend to those that can repay, and not lend to those that can’t.
Look at it this way, as individual consumers, you and I all have credit scores (FICO) which allow banks and financial firms to gauge your ability to repay loans.
If you have a relatively high credit rating (say, a 650 or more) and have proof of income, you are still able to take out a loan, purchase a car or even remain bombarded with credit card applications. Sure the interest rates may be a little higher across the board, but the credit is still there.
In contrast, if you currently have a low credit rating (450) and only a part-time job, most lending standards would screen you out for credit cards (though you never know until you try!).
Anyways, the “credit crunch” as Robert Higgs has pointed out, is only effecting those institutions with crappy credit ratings. And for good reason, they are deadbeats with assets that continue to diminish in value. So why lend to them?
Or rather, why force taxpayers, who are already responsible for their own lives, to pay for the mistakes of others?
Unfortunately I think this will be a short lived victory, especially considering how hard the political elite from both parties is pushing this.
And to make matters worse, while Congress was prevented from taxing you directly, the Fed pumped $630 billion into the market yesterday without so much as a vote. And guess who pays that tax? Anyone with USD denominated assets.
As I’m winding down my contract here in Korea I’d like to quickly discuss what many foreigners do here: teach.
There are roughly 25,000 native English teachers scattered throughout South Korea, most residing in the larger metros.
And where do they teach?
Usually not public schools. The vast majority teach in private academies called hagwons (I’ve mentioned them here). Unless you grew up in East Asia, you probably haven’t seen anything like them.
These aren’t like private schools that simply mimic whatever the public schools create, rather, these are intensive extracurricular programs that focus solely on one or two subjects.
For example, a typical Korean kid that enters middle school has the following schedule:
- Goes to public school from 8am-4pm
- Has a 30 minute break to eat/drive to their hagwon
- Goes to the hagwon from 5-11pm (sometimes even 1am)
- Goes home and study
- Gets 6 hours of sleep
- Repeats six days a week (yes, they go to school on Saturdays)
Note:
- Sometimes they may only go to an English hagwon every other day, alternating with a math or science academy
- Even kids as young as kindergarten participate in these daily cram academies
It’s absolutely insane from a perspective of fostering creativity/innovation/individualism and one of the leading causes for suicide (tons of stress, zero fun). In fact, if there is one statistic that no one probably wants to be number one in, it’s suicide… which Korea currently is.
While this topic deserves more space, some people have asked me how much Korean parents spend on this extra education. According to some recent numbers, about $15 billion.
According to the CIA Factbook there are 8.4 million kids between the ages of 0-14. So let’s cheat and say the same amount for 5-18. That means that parents spend roughly $2000 a year per child on language schools alone.
And people wonder why Korea has the lowest birth rate in the world (seriously, at 1.08 it ranks dead last). After all, relative to middle class families in the West, Koreans earn about 30% less. So in order to afford this education, they have fewer kids.
Anyways, it’s a pretty insane situation especially considering many of these kids are sent to hagwons that have utter crap for curriculum (rote memorization), so it’s a complete waste of their time (apparently its systemic as it pervades their Higher Education system too).
For instance, some of the new kids I get at the beginning of each semester have been going to hagwons for years, but are simply incapable of saying or answering simple sentences like “What is your name?”
Joshua Snyder has more on this and provides the best quote summarizing the situation: too much of a good thing can be bad. Agreed.
And on a slightly different topic you may be interested in my most recent LRC piece on North Korea. If you like it, you may also enjoy a couple of complimentary pieces that I’ve run into lately:
A friend of mine recommended an older TV series called Connections. Each show illustrates how one little idea or invention brought forth another invention which caused another and so on.
For the most part, the facts and figures all have stood the test of time and is fairly entertaining (if nothing else, for the simple fact that the first series is 30 years old and you can see old computers which are considered bleeding edge).
And for anyone that enjoys the History or Discovery Channels, you’ll probably like it for the simple fact that each episode gives you a dozen new concepts to look up later on Wikipedia.
Actually, the most disappointing part of the series is that there are no decent Wiki episode summaries like there are for The Office or South Park. For instance, here are a number of terms I jotted down while watching “The Wheel of Fortune” (trust me, it is nothing like the quiz show):
So a number of people including relatives, have emailed me to see what I thought about the House vote yesterday.
In contrast, if you currently have a low credit rating (450) and only a part-time job, most lending standards would screen you out for credit cards (though you never know until you try!).
As I’m winding down my contract here in Korea I’d like to quickly discuss what many foreigners do here: teach.
According to the CIA Factbook there are 8.4 million kids between the ages of 0-14. So let’s cheat and say the same amount for 5-18. That means that parents spend roughly $2000 a year per child on language schools alone.