Mixed Opinion, But I'm Willing To Wait

[Guest]

I think it's pretty clear that something has to be done to stabilize housing prices as a fundamental part of fixing our economic woes. That and fixing our banking system so that credit again becomes available to both businesses and consumers. That seems pretty fundamental to stopping the freefall of our economy and maybe turning it towards a recovery. The housing price problem seems inextricably tied to the fact that a large number of people are "under water" on their mortgages, have already been foreclosed out of their houses, or are in foreclosure proceedings. The banks are holding even more mortgages that are called "toxic", as well as hundreds of billions of dollars worth of financial derivatives based on those toxic mortgage assets.

To me the mortgage bailout part of the stimulus announced earlier this week sounds kind of Rube Goldberg-like and unfair to those who never got themselves into mortgage trouble. It doesn't seem anywhere near big enough to address the mortage problem. Clearly, those who don't have a mortgage problem are going to pay to bail out those that weren't as responsible. About the only justification seems to be that a foreclosure in your neighborhood might cost you more than the bailout plan. That's tough to swallow. It would be easy to be critical of the plan for those reasons alone.

But a wide variety of financial experts -- conservative as well as liberal, Republican as well as Democrat -- are saying that it's a pretty well-crafted plan, better than anything else that was considered.

Trying to be unemotional about the plan, and with the predisposition to give the new administration the benefit of the doubt in their efforts to correct our awful financial problems, I'll try to read more about why the experts think it's the best possible approach. Maybe I can be convinced.

Clearly, no one really knows whether any of the TARP, stimulus, or nationalizing of businesses is going to work. But doing nothing and letting the free market attempt to resolve the problem clearly won't work. The crisis would deepen, with hundreds if not thousands of failed banks, whole industries such as auto, insurance and home loans disappearing and having to be re-invented. Residential and commercial construction and development would be a shadow of what it was. The resultant unemployment would be 1929-like, for sure. It might take a decade or more for recovery to happen, as it did in the 1930's. But then WWII helped the economic recovery, something we definitely can't rely on. And in the end, he government would own a lot of the assets anyway. The FDIC would own most of the assets of failed banks, including all the toxic assets and real estate-owned, same with Fannie and Freddie. The government would wind up obligated to pay the pension obligations of failed companies and we'd be left without major industries. The unemployment and Medicaid benefits alone would bankrupt many states. The costs of all that would be greater than even the big numbers of the "economic stimulus". It seems logical to spend the money now to try to avoid spending more in the future.

President Obama knows that if the plans his administration have designed don't work, he'll likely be a one-term President. He's said as much. Believing that doing nothing isn't really an option, I'm left willing to give the new administration a chance and hope for the best. Certainly there are many highly vocal critics of these plans, but they consistently seem to be better at crafting their criticisms of these plans than they are in actually proposing logical and complete alternatives. It's easy to forget that these people make a handsome living by being critics, with no responsibility for coming up with better ideas.

So far, I haven't come up with any plans that I like better than those offered by the new administration. I may in the future -- but not yet.

[Guest]

I think it's pretty clear that something has to be done to stabilize housing prices as a fundamental part of fixing our economic woes. That and fixing our banking system so that credit again becomes available to both businesses and consumers. That seems pretty fundamental to stopping the freefall of our economy and maybe turning it towards a recovery. The housing price problem seems inextricably tied to the fact that a large number of people are "under water" on their mortgages, have already been foreclosed out of their houses, or are in foreclosure proceedings. The banks are holding even more mortgages that are called "toxic", as well as hundreds of billions of dollars worth of financial derivatives based on those toxic mortgage assets.

To me the mortgage bailout part of the stimulus announced earlier this week sounds kind of Rube Goldberg-like and unfair to those who never got themselves into mortgage trouble. It doesn't seem anywhere near big enough to address the mortage problem. Clearly, those who don't have a mortgage problem are going to pay to bail out those that weren't as responsible. About the only justification seems to be that a foreclosure in your neighborhood might cost you more than the bailout plan. That's tough to swallow. It would be easy to be critical of the plan for those reasons alone.

But a wide variety of financial experts -- conservative as well as liberal, Republican as well as Democrat -- are saying that it's a pretty well-crafted plan, better than anything else that was considered.

Trying to be unemotional about the plan, and with the predisposition to give the new administration the benefit of the doubt in their efforts to correct our awful financial problems, I'll try to read more about why the experts think it's the best possible approach. Maybe I can be convinced.

Clearly, no one really knows whether any of the TARP, stimulus, or nationalizing of businesses is going to work. But doing nothing and letting the free market attempt to resolve the problem clearly won't work. The crisis would deepen, with hundreds if not thousands of failed banks, whole industries such as auto, insurance and home loans disappearing and having to be re-invented. Residential and commercial construction and development would be a shadow of what it was. The resultant unemployment would be 1929-like, for sure. It might take a decade or more for recovery to happen, as it did in the 1930's. But then WWII helped the economic recovery, something we definitely can't rely on. And in the end, he government would own a lot of the assets anyway. The FDIC would own most of the assets of failed banks, including all the toxic assets and real estate-owned, same with Fannie and Freddie. The government would wind up obligated to pay the pension obligations of failed companies and we'd be left without major industries. The unemployment and Medicaid benefits alone would bankrupt many states. The costs of all that would be greater than even the big numbers of the "economic stimulus". It seems logical to spend the money now to try to avoid spending more in the future.

President Obama knows that if the plans his administration have designed don't work, he'll likely be a one-term President. He's said as much. Believing that doing nothing isn't really an option, I'm left willing to give the new administration a chance and hope for the best. Certainly there are many highly vocal critics of these plans, but they consistently seem to be better at crafting their criticisms of these plans than they are in actually proposing logical and complete alternatives. It's easy to forget that these people make a handsome living by being critics, with no responsibility for coming up with better ideas.

So far, I haven't come up with any plans that I like better than those offered by the new administration. I may in the future -- but not yet.

Doing nothing is smarter than doing something dumb or not thought completely out, especially when the dollar factor is staggering.

There's a big difference between plans and guesses. Plans have a defined process with a projected result based on logic, and the process is determined by the result to be attained. Guesses involve setting in motion certain processes without any validation that they may provide either a desired result or any projected result - that's why BETA testing on small scales is always done first. And if $1Trillion is a BETA test, what the final number may be is frightening!

So what if foreclosures occur on your block. If the fear is that it will lower your property values, then you haven't been following www.zillow.com or any of the other valuation sites. Property values have gone almost-rock-bottom already, whether there are neighborhood foreclosures or not. My DC neighbors are furious that I'm selling my house there for a $160K loss over my purchase price 4 1/2 years ago, but that's what it's worth now, and will be that way for a couple years at least.

My feelings about the banking industry is no different than the stock market - Ponzi would be proud of all of them! In the end, what's happening with them is like when ex-Nazis were placed in positions of municipal control in post-WWII Germany - they may know how the systems work, but do you really trust them back in the same jobs?

We have an unemployment problem for two reasons: 1) the loss of our manufacturing base (not cars, but the small stuff which makes up most of the market) to China and elsewhere; and 2) illegal alien labor (totaling over 10 million workers). That's a heckuva lotta jobs that no longer exist or are not being filled my American workers. Get back even 30% of those jobs and there is no unemployment problem.

[Guest]

You make some excellent points, Mr. Kahuna. My problem with this whole bailout situation is in the ideology. I think this country has to make some basic decisions as to what we really want to be when we grow up. Are we going to be a fast and loose capitalistic society, with big winners and big losers, or are we going to be a Sweden-like democratic socialist society which relies on the government for almost everything (and with an incredible marginal tax rate to support its welfare state - last I knew it was in the 80% range, including VAT, but could be different now). Personnally, I think we need to be somewhere in the middle. As I've gotten older, I've seen the light on health care and now think that nationalizaion of the health care system is not such a bad idea. I work for a large government defense contractor, but think that the Defense Department's budget is obscene and needs major cutting. Points of view change as our lives change, and I'm a lot more tolerant of politicians like President Obama, who strikes me as a person who is extremely intelligent, who demonstrates excellent leadership capability, and who will act in the country's best interest, as he sees it through his own idealogical lens. Personally, I'm willing to give him the benefit of my doubts, as I'm still feeling great about the departure of "W". I am wary of attempts to spend our way out of this economic tsunami, but can't come up with anything much better. While managed bankruptcies would be best in the long run, the short term pain would probably be too much for society to take. So I'm going to support the President as best I can. I hope that the Republicans can find a way to lend some support too, but fully understand their ideological objections, and the need for a "loyal opposition". I do think that the American people will give the president a long leash, as most people understand that the problems are systemic and not of Obama's causing. But if the markets don't start recovering by the end of 2009, I agree, Obama will likely be a one-term president. One other point. I think we can trace this current problem back to the bright idea of globalization, where the U.S. "decided" that there should be a global economy, and that we should give up our leadership of manufacturing to third world countries, in trade for our current service based economy. Looking back, this was a crazy idea, and it's really too bad we can't hold accountable the people who pushed this on the American economy. Unfortunately, you can't go back . . . .

[Guest]

Here's a good article by a well-known professor of economics at NYU's noted Stern School of Business. It explains four options available to "fix" the banking/frozen credit problem. I might note that any of them seem to be easily convertible from "ideas" to "plans" as Steve suggests is necessary before any are adopted.

What was alarming -- but not surprising -- is the author's calculation that in aggregate the U.S. banks are already insolvent. I've thought that to be the case for a while now, describing it as "insufficient capital". But the author's analysis of the situation is far worse than I imagined.

The author presents some pretty well-thought out analyses of the alternatives, explaining why he selected the one he did. (He chooses nationalizing the big banks, which is what seems to be happening.) Note that the author, Nouriel Roubini, while highly respected, is known as "Doctor Doom". While his economic analyses are always well-documented and presented, his conclusions often opt for the less optimistic side of the argument. Unfortunately, as he says in the lead-in to his article, his analysis of the banking situation over the last year or so hasn't been anywhere near pessimistic enough. In any event, this aticle is definitely worth the read so that we all might better understand what's going on with the banking bailout...

http://www.forbes.com/2009/02/11/geithner-banks-nationalization-opinions-columnists_0212_nouriel_roubini.html

[Guest]

Here's a good article by a well-known professor of economics at NYU's noted Stern School of Business. It explains four options available to "fix" the banking/frozen credit problem. I might note that these do seem to be easily convertible from "ideas" to "plans" as Steve suggests is necessary before any are adopted.

But what was alarming -- but not surprising -- is the author's calculation that in aggregate the U.S. banks are already insolvent. I've thought that to be the case, describing it as "insufficient capital", for a while now. But the author's analysis of the situation is far worse than I imagined.

But the author seems to present some pretty well-thought out alternatives, explaining why he selected the one he did. (He chooses nationalizing the big banks, which is what seems to be happening.) In any event, this aticle is definitely worth the read...

http://www.forbes.com/2009/02/11/geithner-banks-nationalization-opinions-columnists_0212_nouriel_roubini.html

The article reminds me of an old military story where a medic at an aid station is working feverishly to bandage a wound and is getting all sorts of advice over the radio on what he should do next. However, what no one is recognizing is that the enemy is charging toward the aid station and all the bandages in the world won't stop the oncoming bullets.

The banking industry is not working in isolation of the rest of the economy, and any "bandaging" of banking without dealing with what caused the wound is blind reaction.

As long as we are continuing a negative balance-of-payments in the scale that exists, banking can only watch money sail offshore. The negative BOP, the unemployment rate and the quantum of debt held offshore is what is squeezing the money supply, and all the sleight-of-hand that the banking industry tries cannot change those facts. We can bandage the money supply with a cash infusion, while watching the economy continue to be shot because we never reacted to the commercial enemy coming over the hill.

I agree wholeheartedly that the "global economy" which has the US not making anything and just becoming the "intellectual" services provider (in other words, not getting hands dirty and staying white-collar) has castrated not only our economy, but our future ability to defend ourselves. Our manufacturing capacity saved our bacon in the 1940's and made sure we could have guns-and-butter in the 1960's. Today, we are buying military goods from other nations, and cannot parallel-produce military and civilian products as in the "olden days." That's a risk for our national security.

[Guest]

I cannot add any real substance to this conversation, except to say that one thing we better do is be aware of how this happens and make sure it does not happen again.

I cannot get out of mind the voice of Barney Frank, Chris Dodd, etc 4/5 years ago saying "there is no problem"....or and I am paraphrasing here....Frank saying he would like to gamble on the housing market.

To know or at least think this entire thing could have been avoided if the folks who are leading us "out of it" had listened and acted is very very disheartning !

I may be wrong but that is how I see it and it bothers me a lot that nobody calls them on it !!

[Guest]

Bucco, there's plenty of blame to go around looking backwards. Frank and Dodd are just a couple on a long list of self-serving, ideaolgical incompetents who history will prove share the responsibility. Heck, "W" was saying that "the economic fundamentals are strong" more than a year after Frank and Dodd said things were OK.

Maybe after the economy recovers, a long look backward to see what needs to be changed to prevent recurrences might be justified. But right now thinking about the past utilizes thinking time and emotions better used to figure out how to get out of this mess.

Steve, as far as the "global economy" is concerned, there would have been little we could have done to avoid what has happened. It's simple economics. The buy side will flow to the low price -- always. No amount of regulation, tariffs, taxes or protectionism could have prevented it. What can serve as a differentiating factor is a better products. Our car companies found that out, believing that the American public would have unquestioned loyalty to U.S.-made cars, regardless of quality or design. We can't avoid a negative balance of trade.

China and India have sufficiently well-educated work forces willing to work at a fraction of the wages expected by Americans, working within economies where the state makes sure that the factories are built to employ them. So far, the U.S. has been wealthy enough to be able to buy what they produce (creating the negative balance of trade). The real problem occurs when there aren't enough rich countries in the world to buy what all those hard-working Chinese or Indians are producing. Then the economic problem morphs into a political or even military one.

Politicians keep taliking about how the middle class has suffered and what plans they have to reverse that erosion. It's impossible unless the companies that the middle class used to work for design and produce better products at prices competitive with the rest of the world. That's not happening and, if you listen very closely to the politicians, the only solutions they offer is for the unemployed middle class to become entrepreneurs and small business owners.

Unfortunately, Steve, those types of businesses will neither correct our negative imbalance of trade (how do you export "services"?) or re-build the military-industrial complex (unless we can defend ourselves with carpet cleaning services or video game makers). We no longer make steel or other basic metals; our auto industry is on the brink; there are other aircraft companies in the world who make airplanes as good or better than ours at prices as low or lower. I'd say that we need to begin creating companies by working smarter. But then that there's that small problem that our schools aren't anywhere near competitive with those in the developing countries and too few of our kids want to study hard enough to become mathemeticians or scientists. Right now the future for the U.S. economy doesn't look too bright to me.

It's hard to imagine how all those small businesses will be able to sustain or improve the middle class standard of living when the population of the U.S. grows to 400 million by the middle of the century. By then there will be the equivalent of another entire China's worth of people out there in the poor parts of the world, all ready, willing and able to work hard to produce the stuff that Americans can't or won't.

I wonder how we'll pay for all that stuff?

[Guest]

But right now thinking about the past utilizes thinking time and emotions better used to figure out how to get out of this mess.
__________________________________________________ ___________

VK.....I may take the time to remind you of this particular quote sometime in the future :)

[Guest]

Bucco, there's plenty of blame to go around looking backwards. Frank and Dodd are just a couple on a long list of self-serving, ideaolgical incompetents who history will prove share the responsibility. Heck, "W" was saying that "the economic fundamentals are strong" more than a year after Frank and Dodd said things were OK.

Maybe after the economy recovers, a long look backward to see what needs to be changed to prevent recurrences might be justified. But right now thinking about the past utilizes thinking time and emotions better used to figure out how to get out of this mess.

Steve, as far as the "global economy" is concerned, there would have been little we could have done to avoid what has happened. It's simple economics. The buy side will flow to the low price -- always. No amount of regulation, tariffs, taxes or protectionism could have prevented it. What can serve as a differentiating factor is a better products. Our car companies found that out, believing that the American public would have unquestioned loyalty to U.S.-made cars, regardless of quality or design. We can't avoid a negative balance of trade.

China and India have sufficiently well-educated work forces willing to work at a fraction of the wages expected by Americans, working within economies where the state makes sure that the factories are built to employ them. So far, the U.S. has been wealthy enough to be able to buy what they produce (creating the negative balance of trade). The real problem occurs when there aren't enough rich countries in the world to buy what all those hard-working Chinese or Indians are producing. Then the economic problem morphs into a political or even military one.

Politicians keep taliking about how the middle class has suffered and what plans they have to reverse that erosion. It's impossible unless the companies that the middle class used to work for design and produce better products at prices competitive with the rest of the world. That's not happening and, if you listen very closely to the politicians, the only solutions they offer is for the unemployed middle class to become entrepreneurs and small business owners.

Unfortunately, Steve, those types of businesses will neither correct our negative imbalance of trade (how do you export "services"?) or re-build the military-industrial complex (unless we can defend ourselves with carpet cleaning services or video game makers). We no longer make steel or other basic metals; our auto industry is on the brink; there are other aircraft companies in the world who make airplanes as good or better than ours at prices as low or lower. I'd say that we need to begin creating companies by working smarter. But then that there's that small problem that our schools aren't anywhere near competitive with those in the developing countries and too few of our kids want to study hard enough to become mathemeticians or scientists. Right now the future for the U.S. economy doesn't look too bright to me.

It's hard to imagine how all those small businesses will be able to sustain or improve the middle class standard of living when the population of the U.S. grows to 400 million by the middle of the century. By then there will be the equivalent of another entire China's worth of people out there in the poor parts of the world, all ready, willing and able to work hard to produce the stuff that Americans can't or won't.

I wonder how we'll pay for all that stuff?

Am I the only one that sees why American workers are not willing to work for the wages paid in the countries you mention? Our people do not want and are not willing to live in the mostly deplorable conditions that those people do. If employment in those countries is so great, then why do they try so hard to come here for a better life or for better pay to send back to their families? We don't have a lot of money, but we are comfortable....at least until all our "planning" goes down the tubes. I think that is all that most Americans want, young or old. OK, it's off the soap-box now for me.

[Guest]

Bucco, there's plenty of blame to go around looking backwards. Frank and Dodd are just a couple on a long list of self-serving, ideaolgical incompetents who history will prove share the responsibility. Heck, "W" was saying that "the economic fundamentals are strong" more than a year after Frank and Dodd said things were OK.

Maybe after the economy recovers, a long look backward to see what needs to be changed to prevent recurrences might be justified. But right now thinking about the past utilizes thinking time and emotions better used to figure out how to get out of this mess.

Steve, as far as the "global economy" is concerned, there would have been little we could have done to avoid what has happened. It's simple economics. The buy side will flow to the low price -- always. No amount of regulation, tariffs, taxes or protectionism could have prevented it. What can serve as a differentiating factor is a better products. Our car companies found that out, believing that the American public would have unquestioned loyalty to U.S.-made cars, regardless of quality or design. We can't avoid a negative balance of trade.

China and India have sufficiently well-educated work forces willing to work at a fraction of the wages expected by Americans, working within economies where the state makes sure that the factories are built to employ them. So far, the U.S. has been wealthy enough to be able to buy what they produce (creating the negative balance of trade). The real problem occurs when there aren't enough rich countries in the world to buy what all those hard-working Chinese or Indians are producing. Then the economic problem morphs into a political or even military one.

Politicians keep taliking about how the middle class has suffered and what plans they have to reverse that erosion. It's impossible unless the companies that the middle class used to work for design and produce better products at prices competitive with the rest of the world. That's not happening and, if you listen very closely to the politicians, the only solutions they offer is for the unemployed middle class to become entrepreneurs and small business owners.

Unfortunately, Steve, those types of businesses will neither correct our negative imbalance of trade (how do you export "services"?) or re-build the military-industrial complex (unless we can defend ourselves with carpet cleaning services or video game makers). We no longer make steel or other basic metals; our auto industry is on the brink; there are other aircraft companies in the world who make airplanes as good or better than ours at prices as low or lower. I'd say that we need to begin creating companies by working smarter. But then that there's that small problem that our schools aren't anywhere near competitive with those in the developing countries and too few of our kids want to study hard enough to become mathemeticians or scientists. Right now the future for the U.S. economy doesn't look too bright to me.

It's hard to imagine how all those small businesses will be able to sustain or improve the middle class standard of living when the population of the U.S. grows to 400 million by the middle of the century. By then there will be the equivalent of another entire China's worth of people out there in the poor parts of the world, all ready, willing and able to work hard to produce the stuff that Americans can't or won't.

I wonder how we'll pay for all that stuff?

We may be on different planes in visualizing "small manufacturing" businesses in relation to the marketplace. Consumer goods at less than $5K price tags to me is "small consumer manufacturing" and those were the backbone of our make-it strength. When the goods were made in the USA, the money cycled within the USA and that's what made the economy strong. When the stuff is made elsewhere, the money cycle short-circuits and the economy stalls.

I could go all day in my disdain toward public education in the USA, and we'd probably agree on most of it. When B.A. and B.S. degrees are diluted, all that happens is that the "professional" level within the nation becomes mediocre as well.

What we need to realize is that not everyone has to have a college education to financially succeed. When everyone has a college degree, no degree has value.

As I drive around TV and see the housing construction, my mind goes back to the days when union carpenters, masons, plumbers, painters and electricians made good living in building houses. In the quest for lower costs, who's out there now doing most of the work that skilled labor used to do at decent, make-a-living wages?

We have been convinced by mutual fund salesmen (college funds?), college recruiters and our own egos that if a kid doesn't go to college and get a BA/BS degree, the kid must be some kind of failure and can expect to find him/herself working at Mickey D's forever or living under an overpass. When we get off that wagon and back onto the value of skilled manual labor, we may get our country back from the outsourcers and coyotes who bring in the illegal alien labor.

[Guest]

Maybe the best suggestion on quickly upgrading our inventory of highly-educated people in engineering, math and science came from Tom Friedman of the New York Times in one of his articles last year. He had just returned from attending his daughter's commencement ceremony at an Ivy League college. A part of the commencement was the "robing" of all the newly-minted Phd's. He observed that among the dozens of candidates being awarded new doctors's degrees in science, math, engineering or medicine there was not one single American (their names and the location of their residence was listed in the commencement program). All were from either Asian countries or India and had come here for advanced education before returning to their homelands.

At the same time he noted that Bill Gates had made a speech recently wherein he said that Microsoft was going to have to begin recruiting for advanced technical people overseas, incurring the time and expense of getting the new employees green cards and moving them to the U.S. He said that Microsoft simply couldn't come close to meeting its needs for technical graduates recruiting only here in the U.S.

Friedman's suggestion was pretty simple. Have a representative of the U.S. State Department on hand at the commencement ceremonies of all the top U.S. technical schools -- MIT, Cal Tech, etc. etc. Then as the newly-minted Phds come off the stage with their degrees and colorful capes, hand them a U.S. Passport. Make them citizens on the spot. No waiting, no fees, no tests, no nothing. Of course, many of them still would not stay in the U.S. But Friedman proposed that enough would and that would begin a flow of technical brainpower to the U.S. that our economy desperately needs but our school systems have not been able to provide.

Pretty easy and practical recommendation, I thought.

[Guest]

Maybe the best suggestion on quickly upgrading our inventory of highly-educated people in engineering, math and science came from Tom Friedman of the New York Times in one of his articles last year. He had just returned from attending his daughter's commencement ceremony at an Ivy League college. A part of the commencement was the "robing" of all the newly-minted Phd's. He observed that among the dozens of candidates being awarded new doctors's degrees in science, math, engineering or medicine there was not one single American (their names and the location of their residence was listed in the commencement program). All were from either Asian countries or India and had come here for advanced education before returning to their homelands.

At the same time he noted that Bill Gates had made a speech recently wherein he said that Microsoft was going to have to begin recruiting for advanced technical people overseas, incurring the time and expense of getting the new employees green cards and moving them to the U.S. He said that Microsoft simply couldn't come close to meeting its needs for technical graduates recruiting only here in the U.S.

Friedman's suggestion was pretty simple. Have a representative of the U.S. State Department on hand at the commencement ceremonies of all the top U.S. technical schools -- MIT, Cal Tech, etc. etc. Then as the newly-minted Phds come off the stage with their degrees and colorful capes, hand them a U.S. Passport. Make them citizens on the spot. No waiting, no fees, no tests, no nothing. Of course, many of them still would not stay in the U.S. But Friedman proposed that enough would and that would begin a flow of technical brainpower to the U.S. that our economy desperately needs but our school systems have not been able to provide.

Pretty easy and practical recommendation, I thought.

Most of the Ph.D candidates never leave the US now. They come here on student visas, qualify for various employment-related immigrant and nonimmigrant visas based on their education (as well as several months of "practical exercise" time with employment authorization), and never leave. If they wanted to go back to their home countries (or elsewhere), they just go to school elsewhere in the world.

However, having a nation of Ph.D. engineers will not make the economy any better - just require the US to import (legally or illegally) semi-skilled and skilled technical labor. Economies are not dependent on an educated workforce, but rather the cycling of money within the society.

And whether any of these people can come to the USA or stay is totally within the purview of the Department of Homeland Security. State Department has no authority in dealing with non-citizens within the US borders and has shared responsibility with DHS outside the USA..