RealGM

Posted: **Mon Jun 9, 2008 9:47 pm**

I don't claim to have any economic background but this group has some solid thinkers in it, and I am interested in their thoughts on i)housing market ii)gas prices and iii)this article ie "Death of the Slacker":

http://www.atimes.com/atimes/Front_Page/JF10Aa02.html

"American families stopped saving for their children's university education, which at a good private institution costs roughly $200,000 per student. Families expected to take cash out of their homes, and students expected to borrow money at low interest rates, to defray these costs. Borrowing rather than saving for college became universal, and the volume of student loans outstanding reached $48 billion last year.

It is hard to think of a comparable case in social history: a country borrows from foreigners to lend money to its young people to spend four years binge-drinking at a university that pretends to prepare them for the world. Textiles to India and opium to China financed the slacking of three generations of British toffs, but the current-account surplus and the student loan securitization markets paid for the slacking of American undergraduates."

Posted: **Mon Jun 9, 2008 11:15 pm**

And what makes things worse is the fact that people are borrowing money using home equity loans in a period where the housing market is down considerably.

All I have to say is that you better hope and pray the republicans don't take power for another 8 years, or issues like these will continue to increase. The federal government right now is refusing to step in and take a positive step towards eliminating "price gouging" -- that goes all the way from the gas pump to the college campus.

Posted: **Tue Jun 10, 2008 1:11 am**

yungal07 wrote:And what makes things worse is the fact that people are borrowing money using home equity loans in a period where the housing market is down considerably.

All I have to say is that you better hope and pray the republicans don't take power for another 8 years, or issues like these will continue to increase. The federal government right now is refusing to step in and take a positive step towards eliminating "price gouging" -- that goes all the way from the gas pump to the college campus.

Please. This has nothing to do with the Republican administration nor is it price gouging. Oil companies are earning roughly the same profit margins as they have been earning for years. Their profit margins are well below the average Fortune 500 company. Those "record profits" you keep hearing about are gross profits due to a very high gross sales. Their profit margins are on the order of 10-12%. A typical Fortune 500 company has a profit margin around 15%. A typical tech company has a profit margin of 20-30%. An oil company makes about 8 cents of profit per gallon of gas. Your government is taxing about 80 cents per gallon.

The high sales are due to speculation on the price of oil. With the dollar falling, investors are looking for a safe place to put their money. Commodities have become the default T-bond. The biggest commodity market is oil so lots of money is going there, driving its price up.

It certainly doesn't help that Democrats are blocking nearly all attempts at tapping new supply. Don't expect the price of oil to go down if Obama takes over.

Posted: **Tue Jun 10, 2008 1:49 am**

nate33 wrote:It certainly doesn't help that Democrats are blocking nearly all attempts at tapping new supply. Don't expect the price of oil to go down if Obama takes over.

Oh, c'mon nate, we can bring down the price of oil. Yes, we can, I say! Just put a few price controls in place, and - voila! - prices down. I mean, where's the downside in that?

Posted: **Tue Jun 10, 2008 1:57 am**

nate33 wrote:-= original quote snipped =-

Please. This has nothing to do with the Republican administration nor is it price gouging. Oil companies are earning roughly the same profit margins as they have been earning for years. Their profit margins are well below the average Fortune 500 company. Those "record profits" you keep hearing about are gross profits due to a very high gross sales. Their profit margins are on the order of 10-12%. A typical Fortune 500 company has a profit margin around 15%. A typical tech company has a profit margin of 20-30%. An oil company makes about 8 cents of profit per gallon of gas. Your government is taxing about 80 cents per gallon.

The high sales are due to speculation on the price of oil. With the dollar falling, investors are looking for a safe place to put their money. Commodities have become the default T-bond. The biggest commodity market is oil so lots of money is going there, driving its price up.

It certainly doesn't help that Democrats are blocking nearly all attempts at tapping new supply. Don't expect the price of oil to go down if Obama takes over.

This is real easy to fix, make more gas. The real question who is stopping us from making it.

As for the gas companies, lets not forget we have only 4 or 5 large gas companies now. I wonder if they all play golf at the same Country Club.

Take a look at the world gas prices. It's up to date.

http://en.wikipedia.org/wiki/Gasoline_usage_and_pricing

Where is the MFN for the US. Look again at the world gas prices.

Most favoured nation (MFN), also called Normal Trade Relations in the United States, is a status awarded by one nation to another in international trade. It means that the receiving nation will be granted all trade advantages - such as low tariffs - that any other nation also receives. In effect, having MFN status means that one's nation will not be treated worse than anyone else's nation.

The members of the World Trade Organization, which include all developed nations, accord MFN status to each other. Exceptions exist for preferential treatment of developing countries, regional free trade areas and customs unions. Together with the principle of national treatment, MFN is one of the cornerstones of WTO trade law.

Posted: **Tue Jun 10, 2008 2:24 am**

I was recently told by someone I respect that most of the US's oil supply comes from Canada and not the Middle East. Anyone know anything about this?

Posted: **Tue Jun 10, 2008 3:08 am**

Some may be surprised to learn that almost 50% of U.S. crude oil and petroleum products imports came from the Western Hemisphere (North, South, and Central America and the Caribbean including U.S. territories) during 2006. We imported only 16% of our crude oil and petroleum products from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates. During 2006, our five biggest suppliers of crude oil and petroleum products were:

* Canada (17.2%)
* Mexico (12.4%)
* Saudi Arabia (10.7%)
* Venezuela (10.4%)
* Nigeria (8.1%)

-- Energy Information Agency

Posted: **Tue Jun 10, 2008 3:09 am**

fishercob wrote:I was recently told by someone I respect that most of the US's oil supply comes from Canada and not the Middle East. Anyone know anything about this?

Actually, Canada is the country that provides the most oil imports to us individually. However, if you aggregate all of the countries that I think most would consider the "Middle East", the ME is - by far - the greatest source of our oil imports.

U.S.Dept of Energy, thru March 2008

Posted: **Tue Jun 10, 2008 3:26 am**

Canada also provides a ton of natural gas. Canada is far and away our leading supplier of fossil fuels if you combine natural gas and oil.

Posted: **Tue Jun 10, 2008 3:42 am**

nate33 wrote:Canada also provides a ton of natural gas. Canada is far and away our leading supplier of fossil fuels if you combine natural gas and oil.

I feel bad for all the jokes I made about Canada in the past.

Water under the bridge, boys. Eh?

Posted: **Tue Jun 10, 2008 3:53 am**

W. Unseld wrote:"American families stopped saving for their children's university education...

interesting. although another explanation might be that the whole economy of university tutition has gone insane. prices are artificially high at universities everywhere because they don't expect people to actually pay for it. everyone is expected to get lots of loans and some grants. students are actually hurt (price wise) if their parents have saved up enough for their tuition.

higher education, just one more thing that's broke in our screwed up economy.

Posted: **Tue Jun 10, 2008 3:56 am**

W. Unseld wrote:"American families stopped saving for their children's university education...

interesting. although another explanation might be that the whole economy of university tutition has gone insane. prices are artificially high at universities everywhere because they don't expect people to actually pay for it. everyone is expected to get lots of loans and some grants. students are actually hurt (price wise) if their parents have saved up enough for their tuition.

higher education, just one more thing that's broke in our screwed up hollywood economy.

Posted: **Tue Jun 10, 2008 2:07 pm**

Yeah, a lot of Universities consider your savings when deciding whether to give you financial aid. So if you save more, you pay more. Very large disincentive to save.

:shrug:

So you put your savings in your house now, easier to hide its value from the financial aid department.

Posted: **Tue Jun 10, 2008 3:31 pm**

Gas/Universities: I don't believe in gas price gouging ie the overly simplistic theory that Exxon etc. are gouging us for no real reason. I am however somewhat convinced that this could be the truth in the University area. I would love to see the difference in tuition between the 70's and now. Couple that with the fact that aside from accounting, pt, and engineering there aren't too many liberal arts degrees that transfer immediately to $$ and I have to wonder how long the system can sustain itself.

Real Estate: It's extremely simplistic but no matter how low it goes, I am reminded of my grandmother's words "They aren't making any more land" so I can't help but feel even in the worst of times it can be a good investment.

Posted: **Tue Jun 10, 2008 4:06 pm**

About a month and a half ago, I bit the bullet and traded in my 06 Jeep Grand Cherokee (that I loved BTW, but was filling up the tank every 4 days for $65 a pop) that had a V8 for a brand new Subaru Legacy (nice, 4cyl, AWD).

So I go from averaging about 12-14 mpg to btwn 25-27 mpg.

The point is, I never thought it would get so bad to where I'd have to change my lifestyle, but it has. I've always been a Jeep/SUV guy, but now, I have only filled up my tank 5 times in just under two months.

Now, my parents are pressuring to buy a house while the market is down so low. I'm drilling my head out trying to make more money and save up so I can purchase a house, but the market is so bad, no one is buying my advertising.

It's a vicious frickin cycle!

Posted: **Tue Jun 10, 2008 5:26 pm**

That is the real estate conundrum, houses are cheaper to buy but no wants to buy the one you're already in; it works out well if you can afford to buy one w/o selling yours but otherwise it's a tough spot.

Posted: **Tue Jun 10, 2008 5:40 pm**

If you have a house already you should ignore the housing market, for precisely this reason. If you're looking to upgrade, maybe.

I read an article in cnn that hinted that oil prices are high now because the dollar is weak. I didn't get the connection (something about speculators loading up on commodities, but oil is traded in dollars so why... well, whatever) but the current prices do seem kind of preposterous.

Posted: **Tue Jun 10, 2008 9:20 pm**

W. Unseld wrote:Gas/Universities: I don't believe in gas price gouging ie the overly simplistic theory that Exxon etc. are gouging us for no real reason. I am however somewhat convinced that this could be the truth in the University area. I would love to see the difference in tuition between the 70's and now.

oh it's absurd. every year in recent memory higher education tuition has risen at a rate more then double that of inflation. sure some of the cost has to do with retention of teachers (although nowadays they seem to care more about published articles then teaching skill or commitment to students), technological infrastructure (computers etc) and some has to do with increased salaries for the maintenance staff and t.a.'s. But the real driving force is that schools are convinced that the market for higher education behaves differently. That increasing tuition actually increases applications (there is actually some evidence to support this however the extent to which they took into account other contextual factors is debatable).

seriously most of our economy is a sham. marketing is more important then skill. cost is now determining worth instead of worth determining cost like it should.

Posted: **Tue Jun 10, 2008 10:42 pm**

Oh, higher tuitions. Yeah, that's based on some studies that the return to investment in education is about 400%, showing that education for several decades has been absurdly underpriced.

Posted: **Wed Jun 11, 2008 12:12 am**

ZonkertheBrainless wrote:Yeah, a lot of Universities consider your savings when deciding whether to give you financial aid. So if you save more, you pay more. Very large disincentive to save.

:shrug:

So you put your savings in your house now, easier to hide its value from the financial aid department.

Another thing schools do not take into account is the age of one's parents. When I was applying for college, my parents were only a couple of years away from retirement and thus had rather large savings. My girlfriend at the time's parents still had another 15 good working years ahead of them but, as they were younger, had considerably smaller savings. She was offered a nice financial aid package, while if I chose the more expensive school, my father would have had to work another two years to help me pay for it.

Needless to say I choose the cheaper school.

Schools have massive endowments, but the policy of giving back the money in the form of aid leaves middle class students (relatively) out of luck. Students with no ability to pay for education are given large subsidies, wealthy students can pay for it without little difficulty (and are often the same students receiving preferential admission due to alumni status), and middle class students get a 200,000 dollar **** you bill.

Nice.

RealGM

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