Thursday, May 26, 2011

Links I'm not getting around to writing a whole post about

I've had a stash of articles that I've been meaning to write about but don't really fill a whole post so let me clear my back log so I can actually stay current.  Here are some articles I found interesting and my thoughts:
  • The treasury is borrowing money from the Federal pension system to bankroll Federal government spending until Congress can stop arguing about the debt ceiling and actually address the problem.  This measure only buys breathing room until August at which point we may default on some obligations unless something changes.  The article says the borrowing isn't a problem because the Fed is legally required to pay it back, but it would make me pretty nervous if I were a federal retiree since a lot of states basically did long term borrowing from their pension systems in the form of underfunding and now retirees are paying the price in some areas.
  • On a related note, I've been seeing many bloggers and news outlets comparing the Federal government sticking to a budget to an American family.  I find this a bit silly because historically neither really has been successful budgeting and Reuters has an article that agrees with me and gently mocks the comparison. 
  • Apparently it's becoming common practice in some restaurants to round a bill to make giving change easier.  Rounding down is more common than rounding up, but both happen and the waiter rarely explains ahead of time.  I'd appreciate my bill being rounded down but it would really irk me to have my bill rounded up for the restaurant's convenience.  If easy change is so important to them the prices on their menu should be changed to round numbers instead of altering the bill without communicating with customers.
  • Apparently graduate schools outside the US have improved significantly in quality and reputation over the last decade and US schools are beginning to see drops in international applicants because of it.  There is also more international interest in graduate degrees and international students outnumbered Americans in taking the GMAT.  I think the top US graduate schools are safe for now, but long term they will face more competition to stay in the lime light.  This will probably hit schools below the top tier a lot harder since it will be very tempting for international applicants to stay home and get a comparable degree.
  • The LA Times debates the end of the 30 year mortgage due to Fannie Mae and Freddie Mac's diminishing dominance in the mortgage market.  I agree with their analysts' conclusions that the 30 year won't go away, but instead will become more expensive and include additional fees.  Americans are just too hooked on it and credit in general for banks to stop offering what is a very profitable, but somewhat risky product.  So prices will be raised to offset risk.
  • Forbes profiles executive MBA programs for under $50,000.  In my mind these would likely be the best option in only a few circumstances.  Most executive MBAs would be only worthwhile, in my opinion, if your employer is paying for it.  As an entrepreneur you would either want a better network than these would provide or would not need the credential at all and could pursue classes or independent learning in a specific and self directed way for much cheaper.  But I'm sure there are counter arguments here and cases I'm not seeing.  Anyone have one?
  • Student loan debt is now officially bigger than credit card debt according to the New York Times.  I suppose this makes sense since educational costs have far outpaced inflation, but it's still a scary thought since student loans are so tough to get out of compared to credit card debt. 
  • Complementing the New York Times article, Today has a student loan debt clock up.  Not sure what the point is since student loan debt isn't a shared burden like the national debt, but an interesting concept.
  • Finally, as others have posted, there's an interesting study out showing the pathetic state of most American's finances.  The main point is that almost half of Americans probably wouldn't be able to cope with a financial emergency on the order of $2,000.

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  1. I guess I don't really understand why people are upset about comparing the US to a family. Granted both are quite a mess but that is because both are spending more than they earn which is not sustainable. Are you saying that the government can continue to spend more than they take in? The end result for both is bankruptcy. Please help me understand why the comparison is faulty since it seems to me that whether a government, business, or family any institution that spends more than it earns is ultimately destined for trouble.

  2. optionsdude, you're right. The analogy itself isn't fundamentally faulty - there are some key parallels between Federal government spending and a family's. I guess my problem with it is the idea that "the federal government should balance it's budget because that's what American families have to do" when American families haven't been doing that at all. The comparison also eliminates a lot of the complexity from the situation.

    There are also a number of economists (and my SO) who think that a little deficit each year isn't a big problem for the US and may even be economically beneficial. This would not be the case for a family.

    Thanks for making me clarify!

  3. What is the difference between an executive MBA and a "regular" MBA? I've always been a bit confused on that point.

  4. Invest it Wisely,

    The main difference I've seen is that an executive MBA is a part-time program where you take classes at night, on weekends, online, or in short spurts. This allows you to continue working full time while gaining your MBA. For a "regular" MBA you become a full time student again for two years or sometimes one year.

    I guess the name comes from executives being too busy to take time off or that you're still an executive while in the program? Your guess is as good as mine.

  5. On Ex-MBA vs MBA sometimes the executive program has a little different admission requirements. I've seen a couple programs that require a certain number of years of experience. I have no idea if that is a standard requirement or not though.

  6. Wanderer, I've seen that too. I've also seen executive MBA programs that have fewer admissions requirements than traditional programs, not requiring certain things like GMAT scores, essays or recommendations.