“I wish I loved anything as much as my kids love bubbles.” You probably know the movie. What I find ironic is how profound the statement really was.
America loves bubbles. A “speculative bubble,” according to Webster’s New World Finance and Investment Dictionary, is, “A rapid but often short-lived run-up in prices that is caused by irrational exuberance, rather than the basic underlying fundamentals of the market. As the speculative bubble increases, more investors are likely to buy until it appears that everyone believes prices will rise further. When the bubble finally bursts, prices fall even faster than they rose with everyone rushing to sell at the same time, which produces widespread and severe losses.”
Some experts claim bubbles are unknown until after they burst, yet financial advisor Peter Schiff, owner of EuroPacific Capital, stated in 2005 that the U.S. economy was, in essence, a bubble that would not be able to sustain its rate of growth and would subsequently crash.
Self-titled “experts” of finance, who now claim that the end of the recession is approaching, were so well-informed as to laugh in Schiff’s face and claim that there was a complete lack of evidence supporting his view. Schiff was right then, the “experts” were wrong.
Yet politicians, including Gov. Bill Ritter, want us to believe the recession has ended and the stimuli worked, while Rep. Ron Paul and Schiff argue the edge of the cliff is approaching and the stimuli only worsened the impending crash. Do you trust those proven wrong or those proven right?
I say trust the latter. Essentially, the entire economy began a massive correction last fall. The correction had been approaching for many years. Republicans and Democrats worked together to interfere in the real estate market in the early 1990s and the bubble began to inflate rapidly as millions who were previously unqualified for mortgages began utilizing the newly legislated lending standards to purchase homes they could not afford.
As philosopher Lewis Black said, “The only thing dumber than a Democrat or a Republican is when these pricks decide to work together.”
Now, in consideration of Schiff’s view of the impending collapse and the definition of a bubble, it appears as if another bubble has been inflating for decades. It relied on the U.S. economy to maintain its unsustainable growth in order to continue its expansion.
Higher education, which this paper’s own editorial board seems to believe is a natural right, is in a bubble. Higher education once made higher paying employment upon graduation a reward for the knowledge and comprehension gained during the years spent in college or university.
Employment alone is no longer a guarantee, much less higher paying employment. We will spend more than $50,000 for a four-year education, and that is if you are fortunate enough to pay in-state tuition.
Higher education has so successfully maintained the illusion of success that many colleges and universities, including CSU, have spent millions of our tax dollars and student fees to increase their administrations and facilities.
Unfortunately, we are seeing recessionary effects with university layoffs and budget cuts.
Higher education, thanks to the federal government, has entered a speculative bubble that is about to burst. We are paying a cost for education that exceeds its value in the market.
And now the federal government will manage student loans. Does anyone believe the federal government will lend money more effectively than private banks? The government is going to take tax dollars from those recognizing the futility of incurring the costs of higher education and “lend” tax dollars to people incapable of repaying student loans.
What do you expect will happen to the value of our higher education then? Still love bubbles?
Seth J. Stern is a senior journalism and sociology major. His column appears Fridays in the Collegian. Letters and feedback can be sent to firstname.lastname@example.org.