Weekly Round Up – December 20, 2013

Before we get to the good reads!

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A Few Good Reads

Here are a few of my favorite reads from the past week.

1. College Student Debt Soars; College Presidents’ Pay Skyrockets:

Presidents of U.S. colleges and universities fundraise with donors, preside over graduation ceremonies and provide unversities with long-range strategic vision. They are also paid handsomely for their work. Forty-two private college presidents earned more than $1 million in 2011, according to a new analysis by The Chronicle of Higher Education. The median total compensation for a college president in 2011 was $410,523, up 3.2% from 2010. Of the 550 presidents’ salaries that were included in the analysis, 180 took home more than $500,000 in 2011 compared to 50 in 2004. Open this article

2. Who Needs the Debt Ceiling?

US lawmakers reached a budget deal this week that will avert the sequester cuts and shutdowns. These fiscal “roadblocks” supposedly damaged investor confidence in 2013, although clearly no one told equity investors who’ve chased the S&P 500 up 26 percent this year. But even so the budget deal is seen by inflationists as only half the battle won, because it doesn’t deal with the pesky debt ceiling. Unsurprisingly, the old calls for a scrapping of the debt ceiling are being heard afresh. Open this article

3. Paul Ryan Has A Brilliant And Scary Demand For Raising The Debt Ceiling:

On “Fox News Sunday” this past weekend, Rep. Paul Ryan created a stir when he said that there would be another debt ceiling fight in the spring.

Today, on the Hugh Hewitt radio show, he elaborated on that statement, according to The Wall Street Journal.

“We’ve never just done nothing,” Ryan said. “We want to make sure that we’re taking steps in the direction of fiscal conservatism, of fiscal responsibility. I, for one, think we need to do more in the energy sector. Open this article

4. ECB and the treatment of sovereign debt:

Peter Praet gave an interview to the Financial Times this morning where he made a very important point about sovereign debt holdings (full transcript without the paywall courtesy of the ECB here):

The worst case, to say it very bluntly, is of a central bank providing liquidity to banks just to buy or carry legacy assets, and the banking sector doesn’t restructure. This was typically the Japanese situation in the early 2000s.

Perhaps paradoxically, a rigorous AQR and stress test helps monetary policy. Appropriately treating banks’ holdings of sovereign debt according to the risk that they pose to banks’ capital makes it unlikely that the banks will use central bank liquidity to excessively increase their exposure to sovereign debt. This is because banks will be wary of the constraints placed on sovereign debt by the stress tests to which they are subject at the same time. Open this article

5. The Plague of the Black Debt:

MoneyWeek claims that everything about the way you live your life could change very badly. How you save your money, your retirement plan, the way you safeguard your assets… all of these things they believe are under a great danger. They don’t make this forecast without evidence, they’re simply looking at their research and they’re presenting its reasonable results. They apparently did the same when they foresaw the global financial crisis, the property meltdown and the downfall of the banks. Open this article