The Education Bubble:
Friend and occasional commenter Monkey Pilot passed this along today: “Next Tuesday on Frontline: College, Inc”. Excerpt:
Higher education is a $400 billion industry fueled by taxpayer money. One of the fastest-growing–and most controversial–sectors of the industry is the for-profit colleges and universities. Unlike traditional colleges that raise money from wealthy alumni and other donors, many for-profit schools sell shares to investors on Wall Street. But what are students getting out of the deal? Critics say a worthless degree and a mountain of debt. Proponents insist they’re innovators, widening access to education. FRONTLINE follows the money to uncover how for-profit universities are transforming the way we think about college in America.
I have argued that traditional, not-for-profit schools offer plenty of worthless degrees too.
BS from GS:
Eric Falkenstein on Goldman Sachs CEO Lloyd Blankfein’s “alpha deception”. Excerpts:
Loyd Blankfein was grilled by the Senate yesterday, and he highlighted one of the oldest tricks in the alpha deception handbook. Don’t admit to being a merely a middleman, because that’s too transparent. That’s a skill to be sure, but something many people can do, and most don’t make $10MM a year doing it. Instead, say, you are ‘transferring risk’, ‘taking risk’, ’selling risk’. If you buy and sell investments, this is technically true.
But it’s hugely misleading. Senator Claire McCaskill better characterized Goldman as a bookie whose main job is setting a line so they aren’t taking a position on the outcome, their customers are, just in offsetting ways.
[...]
[W]hen alpha deceptors hide behind the ‘we are risk managers’ defense, remember, a real risk manager has a prosaic job, doing things that one can understand: verifying income on loan applications, measuring CAPM [Capital Asset Pricing Model] betas, calculating VaRs [Value at Risk] even. They are straightforward, and you can argue about key assumptions. The whole ‘risk manager’ spiel is because if you are getting paid $1MM+ a year, you know that there’s probably someone just as smart as you making half that who wants your job, so better make it sound like you are doing financial string theory.
[...]
Blankfein is a crony capitalist, begging for more ‘regulation’ because he knows that a 1300 page bill basically only helps those with connections and extant massive legal infrastructure, and hurts potential competitors who merely have good ideas. I’d miss them as much as I’d miss Drexel, a giant which died with much schadenfreude.
Drexel of course was Drexel Burnham Lambert, Michael Milken’s old firm. Which reminds me of a brief anecdote. In the late 90’s, when I was working at an asset management company, the manager of our junk bond fund stopped in at the NJ office one Friday to give a presentation. Afterwords, over red devils at the bar next door, he mentioned that he had gone to one of Drexel’s conferences in Los Angeles, and when he checked into his hotel room there was a woman already in it. At first, he said, he thought he got the wrong room, but it turned out that he had the right room, and it came with a call girl.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
