Student Loans

Tyler Durden's picture

Our Marginal Economy





Before you jump on the Bull market bandwagon of "don't fight the Fed," perhaps you should take a look at the quality of the debt the Fed has enabled and the diminishing returns on all that debt.

 
Tyler Durden's picture

The Rot Within, Part II: Inflation Is Not "Growth"





Just as the Federal Reserve cannot directly force you to stick the needle of monetary heroin (debt) into your arm, it also can't force employers to pay employees more. The ultimate hubris of the Keynesian Cargo Cult (which includes the global economy's central banks) is the naive notion that they can manipulate an entire system with a few levers such that the desired outcome--and only the desired outcome--is the output. The idea that you can change one input in an interconnected system of systems and only affect the one output you want is not just naive and simplistic: it requires a level of blindness and incompetence that is off the charts.

 
Tyler Durden's picture

"Buying The Car Was The Worst Decision I Ever Made" - The Subprime Auto Loan Bubble Bursts





It has been over six months since we first highlighted the growing deterioration in the quality of auto loans and mentioned the 's' word (subprime) as indicative that we learned nothing from the financial crisis. Since then, auto loans (and especially subprime in the last few months) have surged to record highs; and most concerning, recently has seen delinquencies and late payments spike. The reason we provide this background is that, thanks to The NY Times, this story is now hitting the mainstream media as subprime-quality car buyers (new and used) realize the burden they have placed on themselves thanks to exorbitantly high interest rates (and a rapidly depreciating 'asset'). As one car 'owner' exclaimed, "buying the car was the worst decision I have ever made."

 
Tyler Durden's picture

Why The Status-Quo Is Unsustainable: Interest and Debt (What Yellen Won't Tell You)





Even if the economy were growing at a faster pace, it wouldn't come close to offsetting the interest payments on our ever-expanding debt. If you want to know why the Status Quo is unsustainable, just look at interest and debt.

 
Tyler Durden's picture

Daughter Of Mortgage Bankers Association CEO Has Lost Faith In American Homeownership Dream





"The world has changed," explains the 27-year old daughter of David Stevens - CEO of the Mortgage Bankers Association. Despite her father's constant 30-year pitch of the merits of homeownership - and knowing full well that rates are low, rents are high, and owning a home 'builds wealth' - Sara Stevens is not buying. After watching "cousins and other family members go through pretty tough situations in 2008 and 2009," her skepticism is broad-based as Bloomberg reports, t’s more than the weight of student loans, an iffy job market and tight credit -- even those who can buy are hesitant. As Bloomberg so eloquently concludes, when even the cheerleader-in-chief for housing can’t get a rah-rah out of his daughter, you know this time is different.

 
Tyler Durden's picture

Bubbles, Bubbles Everywhere





Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble. And of course similar things could be said about most of the rest of the planet as well. And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.

 
Tyler Durden's picture

Why Tuition Keeps Rising (Spoiler Alert: Government Intervention)





As long as the majority of the cost of college education is not born directly by students but rather by Government loans and grants, our institutions of higher learning will not be forced to adapt and find innovative ways of delivering quality education to more students at a decent price. They will go on keeping supply low, tuition higher and expenses growing. The kindest thing our government might do for our kids is to stop throwing money at inefficient Universities in their name, or at least demanding more from those institution in return for that money - in such a world the school’s focus would then shift to keeping prices down while offering good value.

 
Tyler Durden's picture

Consumer Credit Card Debt Tumbles, Non-Revolving Credit Soars Most In 15 Months





Remember that epic spending spree that took place in March when consumers cleaned out their savings account and which resulted in a surge in March retail spending in consumer outlays? Now we know that in addition to borrowing from their savings, consumers also "charged" it, because as we reported last month, the April consumer credit soared by an unprecedented $8.8 billion, the most since 2007, and a clear outlier in recent years. April, incidentally is precisely when the credit card statements for March purchases would come due so while impressive, the surge in revolving credit wasn't quite surprising. However, what is perhaps more notable now that the Fed just released the May consumer credit numbers, is that the month after the March spending spree, funding largely on credit, consumers hunkered down once more, and the May increase in revolving credit was a paltry $1.8 billion, much lower than the April surge, and the lowest since February. In other words, after the spending binge, came the credit card bills, and with them, the spending hangover.

 
Marc To Market's picture

Global Investment Climate: Pieces falling into Place





A look at the investment climate through the currency market and upcoming events and data.

 
Tyler Durden's picture

Is This A Self-Sustaining Recovery Or As Good As It Gets?





Opinions about the U.S. economy boil down to two views: 1) the recovery is now self-sustaining, meaning that the Federal Reserve can taper and end its unprecedented interventions without hurting growth, or 2) the current uptick in auto sales, new jobs, housing sales, etc. is as good as it gets, and the weak recovery unravels from here. The reality is that nothing has been done to address the structural rot at the heart of the U.S. economy. You keep shoving in the same inputs, and you guarantee the same output: another crash of credit bubbles and all the malinvestments enabled by monetary heroin.

 
Tyler Durden's picture

Starting Today Interest On New Student Loans Rises By 20%





While the new quarter has started with a bang for the capital markets and those 1% who actually benefit from one after another record high courtesy of the Fed's "fairy dust", July 1 is an important date for another group of Americans: students. However, instead of more wealth, America's aspiring intelligentsia has something far less pleasant to look forward to, namely more debt, because today is when higher interest rates for education loans kick in. Starting July 1 all new loans for the 2013/2014 student year will increase from 3.86% to 4.66%, a 20% increase.

 
Tyler Durden's picture

The Next Global Meltdown Is Baked In: Connecting The Dots Between Oil, Debt, Interest Rates And Risk





The bottom line is the Fed can only keep the machine duct-taped together by suppressing the market's pricing of risk. Suppressing the market's ability to price risk is throwing common-sense fiscal caution to the winds; when risk arises from its drugged slumber despite the Fed's best efforts to eliminate it, we will all reap what the Fed has sown.

 
Tyler Durden's picture

"My Credit Score Is Terrible...I'm Surprised They'd Give Me So Much [Credit]"





Banks and other lenders issued 3.7 million credit cards to so-called subprime borrowers during the first quarter, a 39% jump. "Even though [those borrowers] could be considered subprime, they're still creditworthy," is the deja-vu all over again message from the Financial Services Roundtable, who proudly crow, they are "starting to see an environment where issuers are feeling more comfortable to extend credit." How great is that? What could go wrong? One credit union exec notes, "lenders in general have really saturated the higher-credit-quality market, so it is only natural that as they look for growth opportunities, they expand downward," and sure enough, as one new borrower exclaimed, "my credit score is probably terrible," adding "I was surprised they'd give so much." Exceptional America is back...

 
Tyler Durden's picture

In The First Quarter $250 Billion In Federal Debt Bought Negative $74 Billion In GDP





Iin Q1, US total Federal debt rose by $250 billion, to a record (duh) $17.6 trillion. This debt "bought" a negative $74 billion in GDP, which declined to $17.0 trillion. Said otherwise, this was the first quarter since the end of the recession when debt rose (by a whopping amount), and when GDP declined sequentially in nominal terms.

 
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