Markets In The Mirror

Looking back over a tumultuous week, a few things stick out in my notebook. 

GREECE
Back in November 2011, we wrote about Greece being able to feasibly exit the euro. We wrote, "The important element for a politician is that Greece is in charge of its own destiny, even if that means being a pariah for a few years."  The ECB seems to agree with our exit feasibility thesis today, and the Greek government seems willing to take on the challenge.

I'm not sure I agree with official statements that the ECB would take whatever measures it could to keep Ireland, Spain, and Portugal in the currency union, were Greece to withdraw.  Ireland and Spain would be better off outside the euro, and it would have a limited future as an international currency. As this tango continues, the Greeks seem to have the upper hand as we end this week.

COLLEGE TUITIONS
Where have all the Occupy Wall Streeters gone?  They've gone to international protests over tuition increases in Quebec, Texas, Berkeley, and London. We've posted about out of control costs at universities, but in the final analysis, it's about value.  A U.S. Department of Education site shows that the average net tuition (after grants) at for profit, four year private colleges was about $19,000.  Columbia College in the City of New York weighs in at gross tuition of $21,000 before reductions for grants. New York's New School, according to the Department of Education, weighs in at #2 among all private schools, $39.000 in net tuition.  Talk about market failure!

The average four year public university comes in at a net tuition of $6,300 per year, with Penn State University being the highest at $14,400 per year.  In many of these state institutions, students have to sit through lecture classes with 200 students!  No value here: these classes should be free.  Beyond the tuition protests, if we spend so much time trying to reform corporate behavior, we should spend more time on our universities trying to instill value creation in them.

HEWLETT PACKARD AND TECH
Disappointing forward guidance from Cisco and markets applauded the announcement of HP's projected headcount reduction of 25-30,000 staffers.  HP has been in flux since 2010, and while it's clear that reductions in force had to be taken, the culture inside the company has to be energized, and that is really the most intractable problem for a new leader.