The State Government has been urged to pass laws to prevent teenagers from getting intimate body piercings, after a controversial tattoo artist started a campaign to give teenagers the right to pierce without parental consent.
In a move certain to outrage parents, Bob Anderson, owner of the popular Primal Urge Piercing in Hay Street, maintains that 16-year-olds already have adult privileges and should have the right to decide what they want to do with their own bodies.
“Sixteen-to-18-year-olds have the right to consensual sex and to learn to drive a motor vehicle,” he writes on his business’ website, urging young people to voice their opposition to the “do-gooders” who seek to restrict the piercing of nipples and genitalia to those aged 18 and above.
But Janet Woollard, Independent MLA for Alfred Cove, who introduced legislation in late 2007 aimed at protecting teenagers from the side-effects of piercing, said the move would be a disaster.
“Children are coming home mutilated and disfigured with pins, rings and studs embedded in all parts of their bodies and there is nothing parents can do to prevent it because this State does not have a minimum age for body piercing enshrined in legislation,” she said.
Dr Woollard’s private member’s Bill would bring body piercing into line with existing laws preventing children under 18 from being branded or tattooed.
Currently, there are only ethical guidelines for body piercing, issued by the Department for Communities, that recommend the restriction of intimate piercings to those over 18 and parental consent for piercings for any other body part for a child aged below 16.
Mr Anderson said such restrictions were futile, suggesting that teenagers would not wait until they turned 18 to be pierced.
Child Protection Minister Sue Ellery said she supported the same approach to body piercing that exists for tattooing and branding and requiring teenagers to seek parental approval.
Dr Woollard said she hoped to table her Bill within the next few weeks.
In the past two weeks, the Federal Reserve has lent or guaranteed at least $57 billion to investment banks. This sudden infusion, the first to Wall Street firms since the 1930s, underscores the financial emergency facing the nation. Yet just last June, the markets were euphoric. How, within nine months, could a lending bubble inflate to gargantuan proportions and then burst into this credit market disaster?
Two points are fundamental as we piece together what happened. First, this is only the latest in a series of modern financial bubbles that have collapsed. Second, while we cannot prevent bubbles, we can prevent a recurrence of this one.
Financial bubbles occur regularly on both the debt and equity sides of investing. Recent ones include the conglomerate stock craze in the 1960s, the junk bond and Japanese excesses of the 1980s, and the dot-com speculation of the late 1990s. The interaction of crowd psychology and the betting nature of markets cause these episodes: After a certain upward point, market momentum can become self-perpetuating — until it reaches such a peak as to collapse onto itself. Much like putting too much air into a balloon.
Over 2004-05, there developed an unusual combination of low interest rates and low inflation, reasonable growth, and a surplus of global savings recycling into the United States. This meant that all types of lenders were highly liquid but faced low yields from traditional lending practices. Seeking better returns, they lowered credit standards and lent to weaker parties, i.e., subprime mortgage borrowers and over-leveraged firms.
The headlines have been reporting what happened next, but the amount of credit that was extended to these weaker borrowers is amazing. Historically, C-rated borrowers have been unable to borrow much from public-debt markets because over decades more than 30 percent of such low-rated debt has defaulted before maturity. In 2006, more than $25 billion of these securities were sold; the previous 10 years, the average was $2 billion.
The music stopped when home prices, which had soared for five years, finally plateaued and then began to fall last year. This reversal spread nationwide and weakened the entire economy. Unable to refinance, countless overstretched homeowners could not make their mortgage payments. Suddenly, defaults loomed, and every lender changed his stance overnight. Deleveraging became the goal, and the credit spigot was shut.
It was, as always, too late. The Fed has poured emergency liquidity into the financial system to avert a collapse, but foreclosures have already skyrocketed, and hundreds of billions in credit losses have been realized. Our country is headed into a recession.
Several lessons are apparent:
First, too much credit was extended by entities that were not regulated, such as the special-purpose, off-balance-sheet vehicles created for leveraging up pools of mortgages. No minimum capital requirements applied to these, nor were they required to disclose their results. In the future, most of these vehicles should be regulated and subject to both sets of controls.
In addition, the largest investment banks have been made eligible to borrow directly from the Federal Reserve. In exchange, they should be subject to Federal Reserve or equally strong oversight. Requiring J.P. Morgan Chase to bear more of the cost of the Fed’s guarantee for its acquisition of Bear Stearns is a small start, though the Fed is still on the hook for the lion’s share.
Second, the exotic character of so many new financial investments is an issue unto itself. Many, such as collateralized debt obligations and credit default swaps, carried greater risk and generated more leverage than market participants understood. The world financial system would be better protected if certain buyers of such instruments were subject to enforceable margin requirements, and issuers of them were regulated and subject to capital requirements.
Third, the books of our largest financial institutions are not sufficiently transparent. The retained risks on their off-balance-sheet financings, for example, were not known to their shareholders. This is inappropriate. The Financial Accounting Standards Board, working with the Securities and Exchange Commission, should expand public disclosure requirements applying to these transactions.
Fourth, the credit rating agencies performed poorly. They assisted in creating some of the least transparent and shakiest financing structures. The SEC should require their boards of directors to annually certify, with corresponding liability, to the independence of the ratings process from borrower influence.
Fifth, mortgage brokers created countless inappropriate or fraudulent mortgages. This isn’t surprising because they are paid to originate. Whatever happens later to the homeowners or lenders is immaterial. Going forward, there should be national licensing for mortgage brokers that embodies the know-your-customer rule for securities brokers. Non-bank mortgage lenders should also be governed by the same capital requirements and regulation that apply to bank-owned lenders.
Borrowing conditions may not return to normal (pre-2006) levels for at least two years. And we may not see speculative excess for a much longer period. It will return in another form, as bubbles always do. Let’s not, however, have a repeat of this one.
California’s perennial debate over how much it is and should be spending on its largest-in-the-nation public school system has escalated sharply this year as the state faces a whopping budget deficit and Gov. Arnold Schwarzenegger proposes – whether seriously or not is uncertain – to take a big bite out of the schools’ money to close it.
The educational establishment and its allies in the Democratic leadership of the Legislature are howling about the governor’s proposal that school spending be whacked by $4.8 billion from what the constitution otherwise would require it to be through the 2008-09 fiscal year.
The Democrats have vowed to block any budget that makes a substantial reduction in state school aid and the California Teachers Association and other school groups have resumed their high-decibel complaint that California’s per-pupil spending is already near the bottom of the states.
Republicans and other critics, meanwhile, complain that California is wasting much of its school money on bloated administration and ineffective, faddish educational nostrums. They cite the state’s near-bottom rankings in national educational achievement test scores.
In the midst of this debate, the Census Bureau on Tuesday issued an extremely detailed accounting of what states (and the District of Columbia) are spending on their schools. It undercuts the mantras being chanted by both of California’s warring political factions.
Unlike other statisticalcompilations about school spending, the Census Bureau’s report is based on hard numbers, is as up-to-date as such data can be (2005-06 fiscal year) and, most important, includes financing from all sources and spending on all categories, rather than the selective figures being batted around by others.
The Census Bureau report strongly refutes the oft-cited “fact” that California is near the bottom in per-pupil school spending. The national average was $9,138 in 2005-06. California was at $8,486, with New York the highest at $14,884 and Utah the lowest at $5,437 – one of 22 states, in fact, that fell below California’s level.
In terms of school revenues, California was 25th among the states at $10,264 per pupil, just under the national average. It was above average in per-pupil income from federal and state sources and about $1,700 per pupil below average in local revenues, thanks to Proposition 13, the 1978 property tax limit measure.
Overall, therefore, California isn’t nearly as deficient in school financing as the education establishment would have us believe. But neither is it wasting money on administrative overkill, as critics on the right contend. Its per-pupil spending on non-instructional “support services” was in fact, slightly below the national average at $3,050, although the sub-categories of overall and school site administration were a bit above average.
The most important aspect of the school spending reports, however, is that they underscore the truism that there’s very little correlation between the amount of money a state spends on public education and how its students fare in academic tests, dropout rates and other measures of educational performance.
California is second from the bottom, for example, in fourth-grade reading scores on national achievement tests, ahead only of Washington, D.C. But Washington is very near the top in per-pupil income and spending at $18,332 in revenue and $13,446 in spending. Conversely, many states nearer the bottom in per-pupil spending, including Utah, outrank California in test scores and other measures.
Money may be important, but it’s clearly not the only factor determining how well schools are educating children. We should be paying attention to what the kids need, not the political goals of adult warriors.
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