AuthorTopic: Official Student Loan Bubble Thread  (Read 1732 times)

Offline RE

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Official Student Loan Bubble Thread
« on: March 14, 2015, 09:24:07 PM »
I know we've covered the Student Loan issue before, but can't find any recent thread with it so I am starting this new one.  Looks like this is beginning to heat up now on the political level, and the Tyler Durdens are doing their usual freak out about "responsibility" etc.  I'm going to write an article on this one, but for now, here's the latest on this nonsense from ZH.

RE

"Cancel All Student Debt" - The Petitions Begin

Tyler Durden's picture





 

With global moral hazard having long ago become institutionalized, and codified as "monetary policy", catering almost exclusively to the TBTF entities in the financial sector, we were surprised it took as long as it did for Obama to announce (as he did last week), that the administration is now studying "new bankruptcy options" for student loan borrowers: code word for an across the board student debt moratorium, or forgiveness.

To wit from "Student Aid Bill of Rights: Taking Action to Ensure Strong Consumer Protections for Student Loan Borrowers":

 
 

The President is directing his Cabinet and White House advisers, working with the Consumer Financial Protection Bureau, to study whether consumer protections recently applied to mortgages and credit cards, such as notice and grace periods after loans are transferred among lenders and a requirement that lenders confirm balances to allow borrowers to pay off the loan, should also be afforded to student loan borrowers and improve the quality of servicing for all types of student loans.  The agencies will develop recommendations for regulatory and legislative changes for all student loan borrowers, including possible changes to the treatment of loans in bankruptcy proceedings and when they were borrowed under fraudulent circumstances.

Well, it didn't take long for virtually every leftist group: from the Daily Kos, to Democracy for America, to Campaign for America's Future and many more, to jump on this bandwagon, and demand - you guessed it - that the administration "cancel all student debt."

Sure, why not: leaving aside the very touchy topic of personal responsibility and accountability, in a world in which record debt is merely "replaced" by even more debt, and in which profits are privatized but losses are always socialized with taxpayers and future generations bearing the brunt in the form of a record $18.2 trillion in public debt (and some $7 trillion more if one adds the government-backed GSEs which one should), why not go ahead and "cancel" the debt. And don't bother trying to explain the simple math that debt is never cancelled, as every liability is someone's asset, and that asset holder will demand to be made whole in the form of more debt elsewhere or else, like Hank Paulson in 2008, it will scream mutual assured destruction and threaten to blow up the world unless bailed out.

In short, what all the concerned entities listed above are saying is not "cancel all student debt", which is impossible, but share the burden of the 43.2 million "student debtors" shown in the chart below, with everyone.

After all, "it's only fair."

Finally, since nobody, anywhere is harboring any doubt that any of the record debt the world is burdened with will ever be repaid, and instead will eventually be hyperinflated away even it means paradropping bags of cash, this proposal actually has a good chance of passing (sorry future generations not only in the US but around the globe).

Once it does, and once colleges know they can charge anything for tuition, room and board - because the debt funding it will be socialized and ultimately "forgiven" - prepare for the green line below, already exponential, to go... vertical.

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Offline Surly1

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Re: Official Student Loan Bubble Thread
« Reply #1 on: March 15, 2015, 03:18:29 AM »
Quote from: RE
...the Tyler Durdens are doing their usual freak out about "responsibility" etc.

Remember, bailouts are ONLY for banks, not for Leona Helmsley's "little people."

As God instructed Moses.
“The old world is dying, and the New World struggles to be born: now is the time of monsters.”

Offline RE

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Re: Official Student Loan Bubble Thread
« Reply #2 on: March 15, 2015, 03:33:57 AM »
Quote from: RE
...the Tyler Durdens are doing their usual freak out about "responsibility" etc.

Remember, bailouts are ONLY for banks, not for Leona Helmsley's "little people."

As God instructed Moses.

Forget the article.  I'm turning it into a RANT!  :icon_mrgreen:

RE
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Offline RE

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Re: Official Student Loan Bubble Thread
« Reply #3 on: March 15, 2015, 08:01:44 AM »
Podcasts from Ellen Brown on the topic.

RE

http://www.globalresearch.ca/student-debt-trap-breaking-the-grip-of-the-predatory-lenders/5436605

The Student Debt Time Bomb: Breaking the Grip of the Predatory Lenders

Global Research News Hour episode 96

 51
 
 25  3
 
 85
The Crisis of Student Debt in America

 

If you owe the bank a thousand dollars, the bank owns you.
  If you owe the bank a trillion dollars, you own the bank.
  Together, we own the bank.

-The Debt Collective

 

LISTEN TO THE SHOW

 

Length (59:32)
 

Click to download the audio (MP3 format)

 

It’s been called a Student Debt Time Bomb.

As of the fourth quarter of fiscal year 2014, student loan debt stood at a collossal $1.16 trillion dollars.  According to CNN, this debt applies to 40 million Americans.

CATEGORY QUARTERLY CHANGE* ANNUAL CHANGE** TOTAL AS OF Q4 2014
Mortgage Debt (+) $39 billion (+) $121 billion $8.17 trillion
StudentLoan Debt (+) $31 billion (+) $77 billion $1.16 trillion
Auto Loan Debt (+) $21 billion (+) $92 billion $955 billion
Credit Card Debt (+) $20 billion (+) $17 billion $700 billion
HELOC (-) $2 billion (-) $19 billion $510 billion
Total Debt (+) $117 billion (+) $306 billion $11.83 trillion

Q4 2014 Household Debt and Credit Report, Federal Reserve Bank of New York [1]

The days when a higher eduation guaranteed a secure job are long gone. At the end of the day, the jobs that might have been lucrative enough to pay off those debts are not there, leaving these former students saddled with an unpayable debt, worsened by compound interest.

But resistance is growing. In February, a group of former students from the Corinthian College Inc. Chain of for-profit schools announced they would not be paying back their loans. This action follows a lawsuit against Corinthian from a federal Consumer Protection Agency over its alleged “predatory lending scheme.”

With over a trillion in debt owing, and growing thanks to compound interest, and no high paying jobs on the horizon equal to paying all that debt off, the ingredients may be in place for the next financial crisis.

On this week’s Global Research News Hour, we pay tribute to the student movements both in the US and in Canada, with a special look at the student debt crisis.

In the first half hour, Ellen Brown puts forward her thoughts about the hazards of turning debt into publicly traded assets, how the situation got as bad as it did and how it compares with the Subprime Mortgage fiasco which led to the meltdown of 2008, as well as her thoughts about possible peaceful ways of resolving the crisis.

In the second half hour we will hear a speech given in September 2011 by Kellia Ramares-Watson which promotes not only reform but the disassembly of our money system. In her speech she also promoted the very action now being taken by the Corinthian 15.

 Ellen Brown is the founder of the Public Banking Institute and a former civil litigation attorney. She has authored hundreds of articles and a dozen books, including the 2007 best-seller Web Of Debt and its 2013 sequel  The Public Bank Solution, Ellen Brown lives in Los Angeles.

Kellia Ramares-Watson is an independent audio and print journalist and podcast producer living in the San Francisco Bay Area. She has a Bachelor’s Degree in Economics (cum Laude) from Fordham University in New York. She has contributed her work to the Women’s International News Gathering Service (WINGS), Indybay.org, Intrepid Report and to Global Research.

 

LISTEN TO THE SHOW

 

Length (59:32)
 

Click to download the audio (MP3 format)

 

The Global Research News Hour airs every Friday at 1pm CT on CKUW 95.9FM in Winnipeg. The programme is also podcast at globalresearch.ca .

The  show can be heard on the Progressive Radio Network at prn.fm. Listen in every Monday at 3pm ET.

Community Radio Stations carrying the Global Research News Hour:

CHLY 101.7fm in Nanaimo, B.C – Thursdays at 1pm PT

Boston College Radio WZBC 90.3FM NEWTONS  during the Truth and Justice Radio Programming slot -Sundays at 7am ET.

Port Perry Radio in Port Perry, Ontario – Thursdays at 1pm ET

Burnaby Radio Station CJSF out of Simon Fraser University. 90.1FM to most of Greater Vancouver, from Langley to Point Grey and from the North Shore to the US Border. It is also available on 93.9 FM cable in the communities of SFU, Burnaby, New Westminister, Coquitlam, Port Coquitlam, Port Moody, Surrey and Delta, in British Columbia Canada. – Tune in every Saturday at 6am.

 

Notes:

1) http://www.newyorkfed.org/newsevents/news/research/2015/rp150217.html

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Offline RE

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Official Student Loan Bubble: Generational War Oncoming
« Reply #4 on: May 13, 2015, 10:39:07 PM »
Bill Bonner is sounding like a Jimbo Quinn Sock Puppet.  ::)

RE

A Generational Storm Is Coming

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Submitted by Bill Bonner via Bonner & Partners,

Yesterday, we began our high-minded graduation speech to the Class of 2015.

We explained how the young graduates were not only the most heavily indebted in history, but also the least likely to be able to pay their debts. Median wages have been going down since these graduates were about five years old … So have economic growth rates.

Today, we continue the speech no one wants us to give …

 

You are heirs to claptrap, nonsense, bogus theories, and trillions of dollars in debt. The systems, programs, and institutions your parents set up are mostly worthless scams. Worse, they produce outcomes contrary to their stated goals.

Welfare programs do not help people escape poverty; they keep them mired in it. Health care programs do not make them healthy; they make them dependent on the drug industry.

Defense industry spending doesn’t make us safer; it funds drones, bumbling interventions, and assassinations… and it creates more foreign enemies. We end up not only poorer, but also less secure.

All of those assertions take more time to explain and prove than we have time for now. But here’s a little example that you will appreciate…

 

25 Years of Poverty

Under President Johnson, the government set up the Federal Direct Student Loan Program to provide “low-interest loans” (back then, “low” meant 8%) to students.

Private lenders make the loans, but they receive the full backing of the feds.

The idea was to help you afford higher education… and earn larger salaries as a result. And with your increased earnings you were supposed to be able to pay off the loan. But at over 11% of outstanding debt, the Student Loan Program now has the highest delinquency rate of all forms of household debt (mortgage loans, auto loans, credit cards).

And it will probably go much higher… as students take on more debt. Total outstanding student debt is expected to bubble up to $3.3 trillion by 2025. What do you do if you can’t pay? Well, the feds have a solution for you. The trouble is, it turns you into the very thing the program was meant to avoid. Here’s how it works…

As long as your income is low, you are allowed to make small token payments every month. Keep this up for 300 payments and your debt is considered satisfied, no matter how little you paid. In other words, the Student Loan Program encourages you to live in poverty for a quarter of a century to get rid of your student debt. Most likely, this will be easy for you to do anyway.

 

living arrangements

Ideal living arrangements to avoid liability for one’s student debt. You only need 25 years of this …

First, because most college degrees do little to make you more valuable to employers. Second, because your parents’ rigging of the economy will make it difficult to make any financial progress anyway. The median household income – after you account for inflation – has been falling since the late 1990s. And good jobs are hard to get. There are fewer “breadwinner” jobs today in America than there were in 1999.

And you can forget about starting your own business. The rate of new start-ups is collapsing. (Remember from last week that the U.S. ranks 46th on the World Bank’s list of the easiest countries in which to start a business.) You can thank your parents for that, too. The system is designed to protect them, their Social Security benefits, their health care, their stock market portfolios, and their businesses. Protect them against what? Against you!

You are the future. You are the competition. You are the ones who should want to shake things up and tear down the walls of bureaucracy, taxes, paperwork, and regulation that make it so difficult for you to start new businesses, get good jobs and build real wealth.

You should be talking revolution – overthrowing your parents’ multitrillion-dollar debts and pulling out of their wars on poverty, illiteracy, Iraqis, Afghans… you name it. You need to stop these silly, pointless, and expensive programs so you can have the resources to pay for your own programs and launch your own stupid wars.

You need to get rid of your parents’ zombies – the millions of unproductive people who get money from the government – so you can afford your own families … your own pet projects … and zombies of your own.

 

A Suicidal System of Credit

You need to stop your parents’ suicidal credit-based money system, too. You don’t know about this, do you? Your professors of government, politics, economics, and finance didn’t mention it, did they?

Well, the system is corrupt and self-destructive. It works only by increasing the amount of debt in the society – including student debt. And it works only until the debt bubble gets so big it blows up. But there’s a logic to it… a sinister logic that turns you into chumps for older generations. Spending on credit favors the existing owners of capital … and people who have existing claims on the government money. Let me explain …

When the government borrows money it gives the money to a zombie to spend, or it spends it directly. Usually, the money goes to an older person – your parents or grandparents – in some form of social welfare subsidy, pension, job, contract, or support program. When they spend the money, it goes into the coffers of corporations. This increases profits… and share prices. Who owns those corporations? Do you? You don’t? Then who does?

Your parents and grandparents benefit again. They are the owners of the nation’s financial assets. By increasing credit, they shift real wealth from the future to the present … and from you to them. This is the money you haven’t earned yet.

I’ll spell it out for you: The government borrows a dollar. It gives the dollar to one of its pet zombies. (It could be a health researcher, a drug addict, or somebody who makes bombs.) The money goes – one way or another – to a corporation, which registers it as a sale.

If it has a 10% profit margin, 10 cents is recorded as a profit. If it sells at a price-to-earnings ratio of 20 times, its stock price goes up $2. This makes the owner of the stock – it could be one of your parents – $2 richer. (I’m oversimplifying … but you get the point.)

But the government now owes $1 more. And who’s going to pay it? You are! Your parents and grandparents are retiring… and collecting their Social Security and health care benefits. They think they will be able to sell their stocks, too … and their houses … and have even more money to spend.

 

Time to Wipe the Slate Clean

Now, it’s up to you …

You need to get a job so you can pay for their health care benefits. You need to pay your taxes so they can keep their wars going. You need to buy a house, too, so they can move to Florida and retire. You need to vote for their candidates … work for their companies … and pay their bills.

This is the test you face. You are arriving in the economy at the tail end of a 60-year credit expansion. Debt has boomed. The economy has boomed. We, your parents, enjoyed an economic expansion that began when we were born and continued, with only short interruptions, until we retired.

We got out of school with little or no student debt. We could start businesses with fewer impediments. We could borrow money to fund our businesses and our lives. We could hire, fire, switch jobs… buy and sell houses… move from place to place.

We were freer – and richer – than you will be …

… unless you can wipe the slate clean of our debts … our foolish wars and dumbbell programs … and our attempts to hold back the future and prevent you from living rich, full, free lives of your own.

If you don’t rise to this challenge, you will inherit our bills, our regulations, our restrictions, our obligations, our delusions, our prejudices, and our vanities. You will also inherit a financial crisis – worse than the crisis of 2008 – and a long and grinding economic slump.

The debt expansion of the last 60 years will turn into a dreary debt contraction, possibly dragging the economy into another Great Depression. Either you find a way to shuck off, default on, or inflate away your parents’ debts… or you’ll stagger under the weight of them for the rest of your lives.

Either you break free from the jackass things your parents have done to you … or you deserve what you get.

Congratulations, chumps.

 

student-loan-debt-cartoon1-570x399

 

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Offline Surly1

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Re: Official Student Loan Bubble: Generational War Oncoming
« Reply #5 on: May 14, 2015, 02:08:16 AM »
Bill Bonner is sounding like a Jimbo Quinn Sock Puppet.  ::)

RE

Welcome to the next generation of divide et impera.

If you can set millennials against boomers, that conveniently takes they eyes of both off the REAL criminals and thieves.
And it works every time, e.g. the commentariat at TBP.
“The old world is dying, and the New World struggles to be born: now is the time of monsters.”

Offline Petty Tyrant

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Re: Official Student Loan Bubble Thread
« Reply #6 on: May 14, 2015, 02:48:55 AM »
 Following this s a surefire  way to get disinherited,
« Last Edit: May 14, 2015, 02:51:05 AM by Uncle Bob »
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Offline MKing

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Re: Official Student Loan Bubble Thread
« Reply #7 on: May 23, 2015, 08:02:20 PM »
Looks like in the middle of the ongoing collapse, students are doing better this year, better jobs and whatnot. Nice to see that they can do better even in the middle of collapse, isn't it?  :emthup: :emthup:

Quote
Employers are recruiting freshly minted college graduates more intensively this spring and not just to be food servers, cashiers and call center representatives.

http://www.usatoday.com/story/money/2015/05/23/college-grads-jobs/27801847/
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

 

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