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(a) Is liquidity okay? – (b) A “fun” end to Student Loans?
I’m listening to some “pundit” guy on tv talking about the equity
market. Among the eight or ten things that he thought were
“constructive” was the fact that bond prices have stabilized and as a
result there was one less thing to worry about. The absence of a
negative being a strong positive.
The fellow has a point. It depends on your perspective. Look at this
graph that covers the QE2 effect (Sept. to-date). Sure enough, after an
agonizing eight-week meltdown, LT bonds have come into a trading range.
Its been about a month now of “stability”.
Bullcrap. Look at a close-up of this "stability". Not stable at
all. 16 moves greater than 1 big figure. Look at those highlighted in
blue. That’s a lot of action. These are all gap moves. One after the
other where there is a big step in a very short period. I think of bonds
as less volatile on average than broad stock indexes. If there were
twelve days in a month with 200 Dow point moves and another three/four
of 400 pointers the smart guys on tv would not be using adjectives like “stable”. They might say, “nervous”, or even better “illiquid”.
Another recent example of a market “gap” that looked (to me) like a liquidity issue (not justified by the news flow):
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Student
loans are bullet proof. Or so they say. There’s no way out. Bankruptcy
does nothing for these loans. Think of it this way; Student Loans (“SL”)
are debtors prison. The flip side is if bankruptcy were a ticket out of
SLs, there would be no SLs. So the rules aren’t going to change.
With that in mind, I found the following report of interest. (actually it is the most boring/endless read ever, don't go there) (PDF-Link)
‘Bankruptcy Tourism’ under the EC Regulation on Insolvency Proceedings: A View from England and Wales
What will they think of next? Tourism that promotes/facilitates
bankruptcy. You gotta hand it to the sharpie lawyers and tour operators
who thought this one through.
It’s really quite simple. A German citizen who has some creditors
chasing after him can go BK in Berlin. But it will result in six years
of garnished wages. The alternative? Move to Wales for a bit, spend a
day or so in court, and come out pretty clean.
How good is the credit protection available in ‘debtor friendly’ Wales? Very good:
An automatic and generous discharge of bankruptcy debts. The scope of the discharge is generous, extends to tax debts and is subject to few exceptions.
Tax debts? If it covers tax liabilities it should cover student loans. How hard is it to do this? Easy.
The
only substantive eligibility requirement that debtors must satisfy
before petitioning for bankruptcy in England and Wales is that they are
unable to pay their debts.
The
only procedural requirements that have to be met are the filing of the
petition and statement of affairs together with the payment of the court
fee. It is common for debtors to make an appointment to attend court, complete and file the paperwork and obtain a bankruptcy order all on the same day.
Who is doing this? (link)
One German debt expert based in Kent said that he was helping management consultants, doctors, accountants, dentists and lawyers to discharge their bankruptcy.
“They come from all over the European Union. They like the tax laws here as they are better than the ones in their country.”
Sorry to tell you, but this will not work for SLs if you continue to
live in America. The US courts will not recognize the English BK
petition. But then again, staying in America is not such an obvious
choice anymore.
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Any one, at any time, can just leave the US, disappear and not come back.
I bet though that most of the people who took >$100K to sleep through a tier-3 school to get a degree in home economics and now can not find a job, are not the type of people who are capable of or interested in leaving the US for good.
These people are going to stay and have their wages and merger benefits garnished for life.....
I agree, there's a high probability of that, for most people. I would also point out though that it used to be that most people would never have given a thought to not paying their mortgage. For those underwater, I'm sure the thought at least crosses their mind, and many have sent back the keys.
I don't know exactly what the future will bring here. But I do know that I don't like the looks of this particular aspect.
Stock up on those paper dollars!
Estonia recently switched from the Kroon to the Euro. They are disposing of the old currency by burning it to heat homes.
In the legal field, we have a couple of terms, namely, 'you can't get blood out of a turnip' or 'judgment proof'.
If this becomes a profit center for the banksters, then i suppose there will be creative ways of hiding the money stream. It's my bet that the banksters collapse first. Good article Mr. Krasting.
Proud to be Welsh !!