States push to tie university funding to better performance

In California, Governor Jerry Brown is pushing a new plan to hold down tuition and raise graduation rates at the state’s public universities. A new proposal would give those universities more state funding if they meet certain targets.

Typically, funding is awarded based on enrollment. The more students universities enroll, the more money they get.

“It’s simply been too easy to enroll students and then not focus enough on how do we get them through?” says Robert Shireman with the education policy group California Competes.

About 60 percent of University of California undergrads finish in four years. At Cal State, where many students attend part-time, just 16 percent graduate in four years.

Governor Brown’s plan would increase funding for those universities over the next four years — if they keep tuition flat, accept more transfer students from community colleges, and graduate more students more quickly.

About a dozen states already link funding to performance, says Julie Bell, who tracks education finance at the National Conference of State Legislatures. Several more are moving in that direction.

“Intuitively, it sounds reasonable,” Bell says, “but we don’t have hard evidence yet that says, in fact, this will work.”

Legislators will have to sign off on the California plan first. State officials present it to the Assembly later today.

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States push to tie university funding to better performance

Why a private equity tycoon is funding a scholarship in China

So what can $ 300 million buy you in China? Perhaps, the Chinese version of the Rhodes Scholarship.

That’s what the Chinese and American private equity mogul Stephen Schwarzman are hoping. The Blackstone Group founder is doling out $ 100 million of his own money and raising another $ 200 million to set up an international scholarship program at elite Tsinghua University in Beijing. Alumni include business leaders as well asa China’s president, Xi Jinping. 

The scholarship will enable 200 students a year to study for a master’s degree, and come into close contact with top Chinese students. 

“This scholarship for China is a soft power coup,” says Marketplace’s China Bureau Chief, Rob Schmitz. “If you’re the Chinese communist party, the students you want to reach will now be coming to you.” 

And it’s not just the Chinese government that wants to make a good impression abroad. Investors in the scholarship want to demonstrate their continued committment to working in China. 

“If you take a look at who’s donating money to this scholarship, it’s basically a who’s who of U.S. companies doing business here,” Schmitz says. “You’ve got Boeing, Caterpillar, J.P. Morgan Chase, Bank of America… all these companies do big business in China.”

Money raised for the scholarship will fund 10,000 students over the next 50 years. About half, Schmitz says, will be from the U.S. 

Potential applicants take note, fluency in Mandarin is not required. 

“The emphasis here seems to be more on schmoozing with other elite students in China, getting to know the country a little, but not getting to know the culture or language too deeply.” 

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Why a private equity tycoon is funding a scholarship in China

RPT-Fitch: Non-government Assets Remain Prominent within Repo Markets

Tue Apr 16, 2013 3:05am EDT

April 16 (Reuters) – (The following statement was released by the rating agency)

An updated Fitch Ratings review of collateral within the triparty repo market highlights some of the inherent liquidity risks associated with financing non-government securities through this short-term funding mechanism, as discussed in a report published today.

Repos remain an important funding mechanism for a range of asset classes. Federal Reserve Bank of New York (FRBNY) data indicates that, as of March 2013, approximately $ 1.83 trillion in assets were financed by the U.S. triparty repo market, a 10% increase since the beginning of 2012.

According to FRBNY data, structured finance represents approximately 4 – 5% of total U.S. repo collateral, equating to roughly $ 75 billion funded through this short-term credit market. The amount of structured finance funded through tri-party repo is about 10x the average daily trading volumes for these securities, an indication of the potential challenges should any reductions or disruptions to triparty repo funding for these assets occur.

Based on Fitch’s analysis of the disclosures of U.S. prime money market funds (MMFs), which provide unparalleled detail on repo collateral, structured finance repo is typically collateralized by deeply discounted, small-sized legacy securities. Over half of Fitch’s sample consists of subprime and Alt-A RMBS and CDOs.

Since money funds are short-term, highly risk-averse investors, a reduction in MMF appetite for this form of collateral could negatively affect the underlying asset class and repo borrowers more broadly.

Several senior government officials and agencies have highlighted the risks of using short-term wholesale funding, including repo, to finance less liquid assets. Fitch’s prior research demonstrated that repo funding for structured finance assets largely evaporated at the height of the U.S. credit crisis. Fitch believes this loss of liquidity likely contributed to the steep valuation declines in this asset class during that period.

For some money funds, structured finance repos provide a higher return opportunity in the ongoing low-yield environment. Repos also provide security dealers a source of leverage and cost-effecting funding for their structured finance securities.

The full report ‘Repos: Non-government Assets Still Prominent’ is available at ‘www.fitchratings.com.’ This report updates Fitch’s previous report ‘Repos: A Deep Dive in the Collateral Pool’ published August 2012.

Link to Fitch Ratings’ Report: Repos: Nongovernment Assets Still Prominent

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Reuters: Bonds News

RPT-Fitch: Non-government Assets Remain Prominent within Repo Markets

The European Crisis is now accelerating right as Germany becomes increasingly uninterested in funding bailouts

 

As noted in our recent article, “The Beginning of Dissent” a key issue for Europe this year is Angela Merkel’s re-election bid in Germany. Merkel has thus far managed to support Europe through verbal and monetary intervention without angering the German populace to the point of outright unrest. However, the political tide in Germany looks to be turning increasingly against both Merkel and the Euro.

 

In this election, there are three key concerns for German voters:

 

1. The threat of inflation


2. The German economy


3. The cost of the EU bailouts

 

Having experienced the result of rampant debt monetization (Weimar) recently enough that it’s still in the public’s memory, the German people are mortified by the specter of inflation. With that in mind, we are already seeing signs that inflationary pressures area rising in Germany though the official date continues to lie about its presence.

 

Indeed we see inflationary pressures in the form of wage hikes…

 

Germany"s regional public service workers will receive an above-inflation wage hike of 5.6 percent over two years, negotiators said on Saturday following marathon talks between employers and the Verdi trade union.

 

Verdi had sought a pay increase of 6.5 percent for the 765,000 workers.

 

Germany, which holds a federal election in September, is under pressure from other euro zone countries to grant higher wage increases to stimulate demand from Europe"s largest economy for imports from the bloc"s troubled debtor countries.

 

http://www.reuters.com/article/2013/03/09/germany-workers-pay-idUSB4N0AU00Y20130309

 

… as well as rising costs in the corporate sector:

 

Worlee-Chemie GmbH, a family-owned company that has produced resins in the city of Hamburg for almost a century, is trying to escape the spiraling cost of Germany"s shift to renewable energy.

 

A 47 per cent increase on January 1 in the fees grid operators set

to fund wind and solar investments is driving the maker of paint ingredients to Turkey, where next month it will start making a new type of hardening agent at a factory near Istanbul…

 

Manufacturers aren"t the only ones buckling under the additional costs. Retailers like Oliver Krumholz, who owns seven Intersport stores in western towns including Muelheim-Kaerlich and Andernach, are also hit.

 

Krumholz is refitting his biggest store with a control system to ensure that the heating, air-conditioning and ventilation aren"t on at the same time. He"s also buying carbon dioxide monitors to measure how many customers are in the store so the heating will shut down when it gets too stuffy.

 

http://www.theage.com.au/business/carbon-economy/german-industry-under-strain-as-energy-costs-jump-20130128-2dg46.html#ixzz2O5vpAnQB

 

And this is occurring at the precise time that the Germany economy is rolling over along with the rest of Europe:

 

Germany"s industrial production stagnated in January as the contraction in manufacturing and energy output was offset by a recovery in the construction sector.

 

Industrial output remained flat in January from a month ago, when it rose by revised 0.6 percent, figures released by the Federal Ministry of Economics and Technology showed Friday. Output was forecast to grow by 0.4 percent.

 

Overall industrial production slipped by working-day adjusted 1.3 percent year-on-year, sharper than the 0.5 percent fall seen in the previous month. The rate of decrease slightly exceeded a 1.2 percent drop forecast by economists.

 

http://www.rttnews.com/2073289/german-industrial-production-stalls-in-january.aspx

 

The mainstream media is going bonkers over the improved investor confidence in Germany. Given investors’ lousy assumptions about the economy in general I don’t give this point much weight.

 

Rising costs… corporations moving aboard (cutting German jobs)… and a slowing economy… this doesn’t bode well for Merkel’s re-election bid… especially given that Germans are increasingly against the Euro bailouts she has supported:

 

A prominent group of anti-euro German economists and business leaders has formed a political party to challenge Germany"s support for euro-zone bailouts, a move that could test the ruling center-right coalition"s hold on conservative votes in the fall general election.

 

With just six months until the election, the new party, which calls itself Alternative for Germany, is unlikely to gain enough traction to win seats in Parliament, analysts say. Yet even if the party comes in below the 5% threshold needed to win representation, it could still attract enough conservative votes to prevent a return of the current coalition government, a combination of Angela Merkel"s Christian Democrats, their Bavarian sister party, and the pro-business Free Democrats. 

           

http://online.wsj.com/article/SB10001424127887323639604578366352468342468.html

 

The above issue is not some political ploy… a recent poll showed 26% of Germans would be willing to vote for the anti-Euro party if the German elections were held today. When you consider middle-aged Germans, the percentage against the Euro rises to 40%.

 

One in four Germans would be ready to vote in September"s federal election for a party that wants to quit the euro, according to an opinion poll published on Monday that highlights German unease over the costs of the euro zone crisis.

 

Germany"s mainstream parties remain solidly pro-euro despite grumbling over bailouts of countries such as Greece. A German taboo on nationalism, rooted in atonement for the crimes of the Nazi era, has helped to muffle eurosceptic voices.

 

But the poll conducted by TNS-Emnid for the weekly Focus magazine showed 26 percent of Germans would consider backing a party that wanted to take Germany out of the euro and as many as four in 10 Germans in the 40-49 age bracket would do so.

 

http://www.reuters.com/article/2013/03/11/us-germany-eurosceptics-idUSBRE92A07F20130311

 

This is a big reason why Germany pushed to confiscate Cyprus depositors’ funds during the Cyprus bailout talks: Angela Merkel has realized that her support of the Euro could cost her the election in September.

 

In plain terms, Germany appears to have finally hit its limit in terms of funding EU bailouts. We get confirmation from this based on the fact that Germany floated the idea of seizing depositors’ funds over such a small bailout (the Cyprus bailout would be €17, compared to €100 billion for Spain, and over €140 billion for Greece so far).

To recap the key point here is that European Crisis is now accelerating right as Germany becomes increasingly uninterested in funding additional bailouts.

 

Basic common sense dictates how this whole process will end (the Euro being broken up in some form or another), however the specifics of how this will play out as well as the timeline are impossible to predict based on the fact that you simply cannot predict the actions of desperate politicians and financial elites during times of Crisis.

 

If you’re an individual investor worried about what Europe’s Crisis really means for your portfolio, we’ve published a FREE Special Report outlining exactly that. It’s titled, What Europe Means For You and Your Savings.

 

In this report, we outline the risks Europe’s banking crisis holds not only for those in Europe, but for savers around the world. We also explain how this crisis will most likely unfold, including which areas are most at risk in the financial system. And we cap it off by listing multiple backdoor plays on Europe that investors can use to profit from Europe’s Crisis.

 

You can pick up a FREE copy here:

 

http://gainspainscapital.com/what-europes-collapse-means-for-your-savings/

 

Thank you for reading!

 

Graham Summers

 

 

 

Zero Hedge

The European Crisis is now accelerating right as Germany becomes increasingly uninterested in funding bailouts

Mississippi River mayors call for more dam, lock funding

Over the past couple  years, the Mississippi River has been beset by floods and droughts, costing hundreds of millions of dollars. This week a group of 11 mayors along the river launched a lobbying push to focus Washington’s attention on a system-wide plan to protect commerce and manage natural disasters along the waterway.  

Atop the group’s list of concerns is more funding for infrastructure like locks and dams to maintain navigation on the river.

A multibillion dollar water bill advancing through Congress makes no mention of the Mississippi River. St. Louis Mayor Francis Slay thinks that’s crazy.

“This is about one of our biggest and most important economic assets in the entire nation, and that’s the Mississippi River,” says Slay. “We have over 100 million tons of cargo that move past the [Gateway] Arch every year.”

Slay says many of the locks and dams on the river are upwards of 100 years old, needing as much as $ 60 billion in deferred maintenance.  

But not everyone is convinced action is needed. Don Sweeney,a transportation economist at the University of Missouri-St. Louis, says the locks and dams are working just fine, and are actually seeing fewer barges.

“On the Mississippi River, from its peak heydays in the 1990’s and late 1980’s, traffic is down some 30 to 40 percent,” says Sweeney. “Rail has become much more competitive.”

The mayors plan to work closely with a newly-formed Mississippi River caucus in Congress to advance their goals.

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Mississippi River mayors call for more dam, lock funding