South By North Strategies, Ltd.

Editor’s Note

Policy Points will not appear today in honor of the Veterans Day holiday. Normal posting will resume tomorrow.

Thank you for your interest in the blog!

Around The Dial – Nov. 10

Cultivating Talent and Skills

The latest installment of the 2010 The State of The South Report, published by MDC, Inc. in Chapel Hill, considers how changes to state-level policies and programs related to postsecondary education can help young adults advance economically. From the report …

The bottom-line argument of this paper is: It is imperative that the South dramatically increase the number of its citizens who obtain a bachelor’s degree, an associate’s degree, a certification, or a job-ready credential. Just as it is urgent that the South attack the too-high drop out rate in high schools, so it is crucial that the region raise its completion rates in postsecondary education. In many places across the region, the pathways from high school to a good job have cracks here, barriers there, sometimes leading nowhere but to a dead end. Straightening and smoothing those pathways requires institutional transformation and policy reform across systems of education, from public schools to community colleges to universities.

It Was The Banks

James Galbraith of the University of Texas at Austin argues that the Obama Administration’s treatment of the nation’s largest banks is responsible for many of the administration’s problems.

Team Obama did none of these things. Instead they announced “stress tests,” plainly designed so as to obscure the banks’ true condition. They pressured the Federal Accounting Standards Board to permit the banks to ignore the market value of their toxic assets. Management stayed in place. They prosecuted no one. The Fed cut the cost of funds to zero. The President justified all this by repeating, many times, that the goal of policy was “to get credit flowing again.”
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The banks threw a party. Reported profits soared, as did bonuses. With free funds, the banks could make money with no risk, by lending back to the Treasury. They could boom the stock market. They could make a mint on proprietary trading. Their losses on mortgages were concealed — until the fact came out that they’d so neglected basic mortgage paperwork, as to be unable to foreclose in many cases, without the help of forged documents and perjured affidavits.
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But new loans? The big banks had given up on that. They no longer did real underwriting. And anyway, who could qualify? Businesses mostly had no investment plans. And homeowners were, to an increasing degree, upside-down on their mortgages and therefore unqualified to refinance.

Around The Dial – Nov. 9