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Thursday, January 31, 2013

The Bubble that will Burst Higher than all Previous Bubbles: Depression Looms as the Dollar Crashes




The Bubble that will Burst Higher than all Previous Bubbles: Depression Looms as the Dollar Crashes.

Previously published 11.02.2009. Most Townhall links are broken

Economics, formerly known as the queen of the social sciences[1], is now so complicated that few can understand the process. But, this cognitive barrier does not prevent political activists from distorting the destined outcome of some financial misadventure as they can readily identify and enlist enough lackeys and stooges to rally and assemble a noxious chorus[2] to sing the praises of such an action. Thus we can assemble a quorum to merrily sing the praises of our destruction. That is happening now as we print money with no end in sight. The ‘rich’ will pay for all this.

The current case of rising asset prices has been analyzed by Nouriel Roubini[3] , as is his custom, and his predictions are usually correct. In his article entitled “Mother of all carry trades faces an inevitable bust” we learn this:

Since March there has been a massive rally in all sorts of risky assets – equities, oil, energy and commodity prices – a narrowing of high-yield and high-grade credit spreads, and an even bigger rally in emerging market asset classes (their stocks, bonds and currencies). At the same time, the dollar has weakened sharply, while government bond yields have gently increased but stayed low and stable.”-- Mother of all carry trades [Emphasis is mine in all quotes.]

Normally, the value of some asset is calculated from its intrinsic value[4] which involves a time element and some projection of the asset’s return in a given time span. We saw wealth evaporate in the housing bubble[5] recently where the intrinsic value was distorted by demand that was driven by explosive credit and government propaganda about ‘affordable’ housing.  Fortunately, we have the law of supply and demand that cannot readily be repealed by governments and that law controls prices and supply. Our current liquidity circus has stimulated demand for assets way beyond their intrinsic values and this will correct itself in a bubble[6] when demand collapses.

But a more important factor fuelling this asset bubble is the weakness of the US dollar, driven by the mother of all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates – as low as negative 10 or 20 per cent annualised – as the fall in the US dollar leads to massive capital gains on short dollar positions.”-Mother of all carry trades

The carry trade[7], which is a return or a profit from just holding an asset, allows for big profits as the dollar loses value thus the intrinsic value of equities and such are temporarily distorted until a massive correction is forced by supply and demand as the carry trade becomes negative. The bubble then bursts. This is all driven by shorting the dollar and that increases the supply of dollars and accelerates the downward spiral.

Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.”-- Mother of all carry trades

This is what happens when governments start to just print money. The investment and financial structure of the country is distorted and people find out how to make huge profits off of the money swimming around in every yard and sidewalk.

A reversal in dollar weakness would require that traders then cover their short positions and:

But one day this bubble will burst, leading to the biggest co-ordinated[sic] asset bust ever: if factors lead the dollar to reverse and suddenly appreciate – as was seen in previous reversals, such as the yen-funded carry trade – the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated[sic] collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments.”-- Mother of all carry trades

This one, in my view, is just another of several looming bubbles. The phony mortgage mess we had stimulated a false demand on housing and that collapsed as people could not pay their mortgage payments. The next bubble will be whatever our phony government attempts to pump up and that is now: jobs, green products, subsidized cars and other follies. This all stems from a belligerent attitude on finances by our elected officials. They seem to believe that if wealth is lost by homeowners who should never have been given loans to buy houses then we can just print money and ‘forgive’ these excesses with do damage to the economy and the ‘rich’ will take the haircut. The ‘rich’ don’t have that much wealth.

The total world gold supply is thought to be about 158,000 tonnes[8] we find and could be contained in a cube with dimensions of less than 20 meters to an edge. At 32,000 ounces per ton[9] we get about $5,308,800,000,000 valuation on the world’s supply at the current price of $1050 in US dollars. Thus 5.3 trillion dollars represents only ½ of our national debt of 12 trillion and is very small compared to our imputed debt from Social Security, Medicare and the 8 or so trillion dollars printed up by the Federal Reserve which might hit 100 trillion according to some estimates. Note also, that the world debt is much higher than this so it appears that gold is one of the few assets that can withstand an explosion in the money supply. Now, what does the supply and demand law tell us about the future price of gold in US dollars? Thus, there must soon be a rush to convert worthless dollars to tangible assets like gold or real estate or other physical goods.

But, our bubble may be off in time and the next big bust may be Japan. Their current debt to GDP ratio is currently 218% and will rise and our US debt is about 85% [=12/14] and rapidly rising. :

"The debt situation is irrecoverable," said Carl Weinberg from High Frequency Economics. "I don't see any orderly way out of this. They [Japan] will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this."[10]-- It is Japan we should be worrying about, not America. Japan is drifting helplessly towards a dramatic fiscal crisis. By Ambrose Evans-Pritchard Published: 5:33PM GMT 01 Nov 2009 

But, the hokum chuckers[11][12] in our government will just raise taxes and ‘soak the rich’ and continue on spending all the merry while. That is what parasites do: they feed off the host until it dies.

When this bubble bursts the debris and residue will litter the moon.  

rycK

Comments to: ryckki@gmail.com



[3] Mother of all carry trades faces an inevitable bust By Nouriel Roubini Published: November 1 2009 18:44 | Last updated: November 1 2009 18:44 http://www.ft.com/cms/s/0/9a5b3216-c70b-11de-bb6f-00144feab49a.html

[4] In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the asset, and discounting it to the present value. http://en.wikipedia.org/wiki/Intrinsic_value_(finance)

[5] An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania) is “trade in high volumes at prices that are considerably at variance with intrinsic values”.[1][2] (Another way to describe it is: trade in products or assets with inflated values.) http://en.wikipedia.org/wiki/Economic_bubble

[6] An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania) is “trade in high volumes at prices that are considerably at variance with intrinsic values”.[1][2] (Another way to describe it is: trade in products or assets with inflated values.) http://en.wikipedia.org/wiki/Economic_bubble

[7] The carry of an asset is the return obtained from holding it (if positive), or the cost of holding it (if negative) (see also Cost of carry) http://en.wikipedia.org/wiki/Carry_trade#Currency

[9] There are 32,150 troy ounces in a metric 1 metric ton

[10] It is Japan we should be worrying about, not America
Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return. By Ambrose Evans-Pritchard  Published: 5:33PM GMT 01 Nov 2009  http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6480289/It-is-Japan-we-should-be-worrying-about-not-America.html

[11] The Cubans Teach Us about Economics and Arithmetic. I hope Paul Krugman reads their Works. He needs some Elementary Instruction.

[12] The Geithner Pledge:

"We have the deepest and most liquid markets for risk-free assets in the world. We're committed to bring our fiscal deficits down over time to a sustainable level.

"We believe in a strong dollar ... and we're going to make sure that we repair and reform the financial system so that we sustain confidence," he said.”[12]-- Geithner tells China its dollar assets are safe On Monday June 1, 2009, By Glenn Somerville http://finance.yahoo.com/news/Geithner-tells-China-its-rb-15396905.html?.v=2

The Dollar Sags in Full View of the World This Invites a Run on the Dollar. Inflation Threatens US.

Tuesday, January 22, 2013

The New York Times Advises: Plan B: Skip College. They Missed Plans A, C and D




 The New York Times Advises: Plan B: Skip College. They Missed Plans A, C and D.

Revised 1.22.2013 Most Townhall links are broken. 

The bankrupt New York Times—aka the Walter Duranty Papers[1][2]-- has many heroic and phenomenal accomplishments, mostly bestowed upon themselves with much pomp and circumstance and with a necessary due diligence to carefully avoid their earlier mistakes in journalism and thinking. Their noisiest fans are Marxists. Barrowing their hackneyed theme on the comments about the shrunken remains of Marxism the “…idea was correct, and still is, but people didn’t carry out the dream successfully and we really need to try again.” This is an ongoing essay in tautology. The word education is more properly translated as propaganda by those dedicated leftists who believe they have some solutions to the world’s problems almost utterly caused by the crass evils capitalism. Today, they embark on a new and wonderful change in education.

Education, as an institution, or more properly called a scamish job mill for the semi competent worker, occupies the central star in the galaxy of social programs for the left. Who could be against education or ejukashon[3] as it might be more colloquially pronounced in places like California.[4][5][6] This notion is the topic of an interesting op-ed by Jacques Steinberg in the Times. The central theme is that education is required for some jobs but not necessarily all and that we need some alternatives to our current system, as always. This is Plan B. This is also a very stale essay.

Jacques Steinberg begins with our lesson for today:

The idea that four years of higher education will translate into a better job, higher earnings and a happier life — a refrain sure to be repeated this month at graduation ceremonies across the country — has been pounded into the heads of schoolchildren, parents and educators. But there’s an underside to that conventional wisdom. Perhaps no more than half of those who began a four-year bachelor’s degree program in the fall of 2006 will get that degree within six years, according to the latest projections from the Department of Education. (The figures don’t include transfer students, who aren’t tracked.)”[7]--Plan B: Skip College By Jacques Steinberg Published: May 14, 2010 [Emphasis is mine in all quotes.]

As an echo here, we also note that about half those who attempt to graduate from high school also share this very disappointing metric in many schools around the nation and almost always in the major cities. I wonder if there is some connection. This prompts us to wonder if some of these are the same people. But, that question is not so politically correct so we need to follow the theme here and behave. This observation is not exactly new or even unpredictable so there must be some agenda that will advance the causes of unionized teachers or administrators.

Then, a key metric shines brightly and illuminates this article:

For college students who ranked among the bottom quarter of their high school classes, the numbers are even more stark: 80 percent will probably never get a bachelor’s degree or even a two-year associate’s degree.”--Plan B: Skip College By Jacques Steinberg

Bingo! But, how can this be? And, now for the central but unaddressed question here: why did we ever think that those on the bottom tail of the Bell Curve [below IQ = 100] would ever be able to handle college? Does IQ have anything to do with this? This is currently the thinking in Plan A and it works in advanced education only for those with IQs greater than about 110.  I think we already knew that and it is called the education gap. [8]  This gap is the difference between average test scores of white and blacks or 100- 85 for a 15 point difference [one standard deviation]. These 15 IQ points have even been acknowledged by the New York Times.[9] This gap was first noticed about 1905. [10] There is nothing new here so this article is at best a pot boiler.

Among those calling for such alternatives are the economists Richard K. Vedder of Ohio University and Robert I. Lerman of American University, the political scientist Charles Murray, and James E. Rosenbaum, an education professor at Northwestern. They would steer some students toward intensive, short-term vocational and career training, through expanded high school programs and corporate apprenticeships.”--Plan B: Skip College By Jacques Steinberg

The Bell Curve, one of whose authors is mentioned in the paragraph above, debunks this phony theory of equality with numerous—nay millions—of examples.[11] The notion of a bell curve, and particularly if such a curve or curves are compiled from race-sorted data, is outlawed by the left in all conversations and thinking. Whites and Asians mostly rank in a median value of 100-102 but blacks and some Hispanics rank lower with a median at about  IQ=85. The existence of such a social monster as cognitively weighted standardized testing violates the ultimate basis of the political concept of equality.[12][13] Never mind that half of any population has to be in the bottom half--this is still unfair. Socialism depends upon such nostrums as equality and many far leftist governments have solved this problem by a simple extermination of the cognitive elite an example demonstrated to the world by Pol Pot and the Khmer Rouge political party in Cambodia.[14] To kill off the top tail of the Bell Curve in a given society actually does yield equality in a warped sense. But, this does make political sense in leftist terms.

The article trundles forward even reviewing the German testing system [Plan A] that divides and steers most of the students into college versus a vocational educational system. But, from the lower tail[15] of the Bell Curve we get this response:

Peggy Williams, a counselor at a high school in suburban New York City with a student body that is mostly black or Hispanic, understands the argument for erring on the side of pushing more students toward college.
“If we’re telling kids, ‘You can’t cut the mustard, you shouldn’t go to college or university,’ then we’re shortchanging them from experiencing an environment in which they might grow,” she said.”--Plan B: Skip College By Jacques Steinberg
No, we are not. This is the standard political whine we hear from those who cannot compete in our society for many assorted reasons. The German testing tuition system of Arbitur[16] [ the "Begabtenpr├╝fung" or "test of aptitude"] actually is a Plan A  and it works very well in  Finland too. If there was some charge to finish high school by the left then this comment might make sense, but it only calls for more spending on ‘education’ and wasting that money.  This essay runs off into the social swamps here with comments like this:

““It’s not just about the economic return,” he said. “Some college, whether you complete it or not, contributes to aesthetic appreciation, better health and better voting behavior.””—[comment quote by Morton Schapiro] in Plan B: Skip College By Jacques Steinberg

At this point, I am tempted to suggest that much of our latent ‘education’ is mere propaganda. The assembly of propaganda pieces[17][18][19][20][21] and other blends of disinformation are designed to sway the reader with some guarantee of money, justice or, more appropriately: the notion that justice will claw-back some of the ill-gotten money or hides of evil doers and capitalists.  Victims must be identified, praised and the wrongdoers punished, at best, with higher taxes or more legislation. This article by Steinberg skirts around the raw edges of this but really misses the defined opportunity espoused by President Obama:


Here, Obama theorizes of ways to avoid the Bell Curve:

Standardized testing is stuck in the crossfire in the debate over accountability, and Obama has stepped up to take aim. He says that too often standardized tests fail to provide valuable or timely feedback. Meanwhile, “creativity has been drained from classrooms, as too many teachers are forced to teach to fill-in-the-bubble tests,” Obama says. He doesn’t go so far as to say he’ll drop testing completely; it should be one of the “tools that we use to make sure our children are learning. It just can’t dominate the curriculum to an extent where we are pushing aside those things that will actually allow children to improve and accurately assess the quality of the teaching that is taking place in the classroom.” How does he plan to revamp testing? “I will provide funds for states to implement a broader range of assessments that can evaluate higher-order skills, including students’ abilities to use technology, conduct research, engage in scientific investigation, solve problems, present and defend their ideas,” says Obama.[22]

Education must sometimes be only propaganda.

We all know that affirmative action is a tacit admission of the failure of ‘education’ to equip each of our citizens with an equivalent set of mental and entrepreneurial skills and opportunities so they can compete. Cognitive equality is an oxymoron. There is no way you can give standardized tests and ensure that everybody gets the average test grade with nobody getting a higher or a lower test result. Or, even the more absurd notion that everybody can score above the median. The much maligned book The Bell Curve[23], sometimes accused of actually causing the ‘problem’ of cognitive distribution in the US, actually states the blunt facts about our societies and the distribution of mental skills. This salient fact that half the people who take the standardized test will score below the median is the rallying point for ‘change’ in ‘education.’[24] That is not fair. Society must be equalized.[25] Thus propaganda must replace education. The Bell Curve correctly predicts what groups [NOT individuals] will probably pass high school, college and who will excel in the work place—and who will not—but strictly on a group basis. It doesn’t work for individuals. This fact commits millions to menial jobs for lack of certain skills but is casus belli for the political left.[26] Politically, then, about half the populations of various minorities and the white majority are candidates for political exploitation based only on their intrinsic skills. This works well politically and that is where about 50% of the votes are derived.[27]

So, in nearly all of the 14,000 school districts across the land there are no school systems where blacks routinely score higher than whites on standardized tests with roughly 50:50 population ratios. These tests have been stringently rewritten to expunge the ‘white bias’ and ‘be fair’ and when re-administered have produced the same results; A15 point deficiency is nearly always observed. If the 15 point gap was a myth then we would expect to see about half the school districts showing blacks proportionately populating the upper half of the academic population and we observe essentially none of this. Money is not the solution as the Washington, D.C, school system spends the most money on their students and have probably the worst academic record in America.[28] Money is clearly not the answer.[29] The lefties tacitly admit (without saying it directly) that affirmative action is absolutely necessary for many minorities to compete in our society. They either don’t have the cognitive skills or refuse to use them, or a combination of both. The use of race-norming was used to disguise this gap. [30][31] This worked by sorting test scores by race, forming two averages, taking the difference and adding that difference to the black test scores.[32][33] This is now illegal. Such a practice, while being wholly alien to decency is a grand example of the left’s ability to sanction intellectual dishonesty. This is a characteristic of the liberal progressive where decency, truth, mendacity and other desirable human attributes are cast aside for political gain. You can be a liar, thief, a pervert or anything else like Bill and Hillary Clinton and welcome warm applause from the far left.

Push Plan B and get “something.”

Nonetheless, Professor Rosenbaum said, high school counselors and teachers are not doing enough to alert students unlikely to earn a college degree to the perilous road ahead.

“I’m not saying don’t get the B.A,” he said. “I’m saying, let’s get them some intervening credentials, some intervening milestones. Then, if they want to go further in their education, they can.””--Plan B: Skip College By Jacques Steinberg

The Politics:

Still, by urging that some students be directed away from four-year colleges, academics like Professor Lerman are touching a third rail of the education system. At the very least, they could be accused of lowering expectations for some students. Some critics go further, suggesting that the approach amounts to educational redlining, since many of the students who drop out of college are black or non-white Hispanics.””--Plan B: Skip College By Jacques Steinberg

Again, the minorities cannot compete on equal terms and this truncates their meager chances.

This pathetic pathway is apparently Plan B.  Plan A, from testing, excludes more than 3/4 of our society from benefiting from a legitimate B.A. or B. S. or  higher. College is only for a few. Path B, mumbled to death in this article is nothing but affirmative action reboiled and offered with some new excuses for failure preemptively supplied. Liberalism insists on equal outcomes in any arena but mostly for jobs. [34] This is a tangled form of Incrementalism (Muddling Through, Disjointed Incrementalism, Incremental Planning).[35]

Plan C, in my view, and an advance over Plan B  would be some system whereby businesses would set up education systems of their own and teach, perhaps in a year or less, the skills needed for jobs in that business for that level. This could be accomplished by corporations cooperatively sponsoring various schools nationwide. They could decide what [if anything] could be done with partial college training or partial high school work in an individual case before entry. The school could monitor the diligence of the students and filter out those who do not have the determination to succeed. Note that it is the cognitive skill base that is the most important determinant for academic learning and that can easily be detected by extensive testing of candidate students. But, that is also an ethnic filter in several cases. Therein lays a massive political barrier. Plan C would tailor employees with a focused education to fit various job descriptions and hence abusing the notion of equality or equal outcomes.

Plan D, my plan, is to focus the spending on education only on effective path ways. If students cannot pass standardized exams in their first year in high school then they would be offered some vocational training such as works in Germany. We have a society with a job spectrum of cognitive and other essential skills and agreeing with some of the comments above in this article college is not required for all cases. We should be careful to not give ‘education’ more praise than it deserves from the government point of view. The voting comment above [better voting behavior] refers to the use of political propaganda flatly defined as ‘education’ when it is not. There is no reason to bluntly limit the educational level of any person if they are qualified in cognitive terms to continue on. But, there is also no need to overeducate persons for which no job exists at that level. It is even worse to manufacture jobs. We have a form of bell curve in our job categories in our country and the most efficient way to fill them is to provide enough education for the individual to succeed at that level. If better jobs appear and there is a need for greater skills then some extra education would obviously be required for some and that level should be made competitive and determined by standardized testing along with the wishes of the student and the job giver in concert. Everyone should attain the highest level they can for their job. This fails as standardized testing magnifies the bell curves intrinsic to our society.

But, any plan other than B, and particularly one in which there is minimal student testing and certainly no teacher credential testing, will be blocked by the left based on their warped equal outcomes mantra. Nobody knows better than the left what a failure our system is in places like California, and particularly exemplified by cities like Detroit, Baltimore, Oakland, Los Angeles, Philly, Atlanta and New Orleans—all liberal bastions of government and ‘education.’

In our current political atmosphere there is no hope for Plans A, C or D.  Plan B is just a mumbler’s paradise where more money can be wasted for political reasons. That will maintain ‘equality’ for all. There is the place where new jobs for the left will appear to ‘solve’ a problem that insolulable. This means job security for many at our expense.  And, they wonder why many jobs disappear here and reappear overseas. This will continue.  Companies in the US routinely import people to fill job slots that cannot be filled. The equal outcomes nostrum just dumbs down America and that is one of the left’s best accomplishments.

rycK

Comments: ryckki@gmail.com



[2] In honor of that celebrated Communist stooge and liar and winner of the Pulitzer Prize for the NYT. The color RED is used in my essays in honor of Walter Duranty, a saint, if there could be one, in the Marxist Archives of Honor.

He said that these people had to be "liquidated or melted in the hot fire of exile and labor into the proletarian mass". Duranty claimed that the Siberian labor camps were a means of giving individuals a chance to rejoin Soviet society but also said that for those who could not accept the system, "the final fate of such enemies is death." Duranty, though describing the system as cruel, says he has "no brief for or against it, nor any purpose save to try to tell the truth". He ends the article with the claim that the brutal collectivization campaign which led to the famine was motivated by the "hope or promise of a subsequent raising up" of Asian-minded masses in the Soviet Union which only history could judge.” http://en.wikipedia.org/wiki/Walter_Duranty

[3] A new word.

[7] Plan B: Skip College By Jacques Steinberg
Published: May 14, 2010 [Emphasis is mine in all quotes.]http://www.nytimes.com/2010/05/16/weekinreview/16steinberg.html?src=me&ref=general

[8] “The Education gap is a common term for describing differences in educational attainment measured by grades, test scores or other measures between different social groups. The groups compared often are categorized by race or ethnicity but may also include gender or other features.”

[9] An Emerging Theory on Blacks' I.Q. Scores by Daniel Goleman; Daniel Goleman Covers Psychology For The Times.  Published: April 10, 1988 “Most social scientists know - though few publicly discuss it - that there has been a puzzling gap of about 15 points in I.Q. test scores, on average, between blacks and whites in America ever since the tests were first widely used more than 70 years ago. After long debate over why blacks score lower, and what it means, a fresh theory is putting the discussion into perspective.“

[10] The Measurement Of Intelligence by Lewis M Terman. Published by   George G. Harrap & Co. Ltd, 1905.

[11] This book[The Bell Curve: Intelligence and Class Structure in American Life (ISBN: 0029146739)  by Herrnstein, Richard J. and  Murray, Charles  Free Press of Glencoe , Inc, Old Tappan, New Jersey, U.S.A., 1994.] is blacklisted in leftist circles  because it shows that when standardized test scores are sorted by race that blacks and Hispanics score much lower than whites and Asians. Thus, a refutation to this vast array of data must somehow be accomplished.

[15] A Gaussian distribution has a median and sloping curves on both sides of this median. They are frequently referred to as the upper and lower tails of the curve.  http://en.wikipedia.org/wiki/Normal_distribution
[22] Barack Obama on Education August 1, 2008 http://www.education.com/magazine/article/Barack_Obama/

[23] The Bell Curve: Intelligence and Class Structure in American Life (ISBN: 0029146739)
by Herrnstein, Richard J. and  Murray, Charles  Free Press of Glencoe , Inc, Old Tappan, New Jersey, U.S.A., 1994.

[25] Political Lies, Ghouls, Dictators and the Eternal Quest for your Wealth.

“The quest for ‘equality’ and ‘social justice’ might be attained in other ways we are told and that ‘education’ of the masses is the way to do this. If we teach our offspring to be classless and steep them in fairness and humanity then social justice will spring forth like flowers in the meadows.  The disease that prevented this splendor was capitalism. Any intrinsic truths in the educational theory entrenched in this message failed to materialize in the society as a whole because of two factors: propaganda and the maldistribution of cognitive attributes or IQs. “

“To fix this problem, propaganda must replace education. The trickle down theory of distribution of wealth was unacceptable according to the new educated view.  Now leaders of corporations became greedy tyrants and exploited their employees instead of being benefactors and employing millions from their risk-taking and ingenuity. Only a few of these entrepreneurs would rise to power and they were not the ones who by an accident of birth became royal rulers, but they were the ones who were adept in business. In England those who were originally privileged to become educated by their royal parents or peers of the realm were supplanted by those with higher intelligence, more assertive personalities and advancing business skills. Education had now, in the views of the left, produced the same monsters as the royal bed chambers and must be severely modified to teach the masses how to recognize the proper leaders that would create a more liberal society. Education, then, must be modified and transformed into a major propaganda mechanism [a lie machine] that would create a mold where the elite could push out conditioned citizens who would conform to the liberal model. The citizens must be ‘educated’ to the phony notion that socialism or one of its variants is the best form of government for all. This, of course, is a lie and a difficult one to implement without some heavy propaganda and some other drastic measures. The left used both.  Educators must now be social tyrants and act as stooges of some leftist social agenda to hold jobs in the leftist-dominated educational system. Testing must be minimized and students passed along to higher grade levels without regard for academic credentials or any recognizable form of performance. Politics has now replaced facts.”


[27] The Apollo Alliance, Marxism and Another Chance to Challenge Capitalism Explained. [next paragraph]

[28] Can D.C. Schools Be Fixed?  “After decades of reforms, three out of four students fall below math standards. More money is spent running the schools than on teaching. And urgent repair jobs take more than a year.

[29] Education gap can be closed with fresh ideas MY VIEW • Black and Hispanic students are being left behind. By Abigail Thernstrom The Portland Tribune, Mar 2, 2004.

How much would it cost and what would the benefits be if blacks and Hispanics graduated from high school, went to college, and graduated from college at the same rate as non-Hispanic whites? The answer to this important question for the future of the nation is explored in this report. The costs of education would be high, increasing by about 20 percent in California and 10 percent in the rest of the nation. But the benefits, in the form of savings in public health and welfare expenditures and increased tax revenues from higher incomes, would be even higher.
[32]  Quote from Linda Gottfredson: "We now have out there what I call the egalitarian fiction that all groups are equal in intelligence...differences in intelligence have real world effects, whether we think they're there or not, whether we want to wish them away or not. And we don't do anybody any good, certainly not the low-IQ people, by denying that those problems exist. http://en.wikipedia.org/wiki/Linda_Gottfredson

[34] The New York Times Essays us on Poverty, Poison and Tax Policies: The Orshansky Glubberance Explained  Posted by rycK on Monday, February 18, 2008 2:58:41 PM