America is better off when President Obama is out on the stump bloviating and boasting rather than in Washington actively doing harm. But the whoppers he just told the students at the University of Wisconsin are beyond the pale. Said our spinmeister-in-chief: "And the unemployment rate is now down to 5.3 percent. (Applause.) Keep in mind, when I came into office it was hovering around 10 percent. All told, we’ve now seen 64 straight months of private sector job growth, which is a new record — (applause) — new record — 12.8 million new jobs all told." That’s a pack of context-free factoids.
This wasn't supposed to happen...
"A true bubble is when something is overvalued and intensely believed. Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus."
The fact that Moody's and Fitch are beginning to reevaluate student loan ABS is indicative of an underlying shift in the market. Between the proliferation of IBR and the Department of Education's recent move to open the door for debt forgiveness in the wake of the Corinthian collapse, financial markets are beginning to see the writing on the wall. Perhaps Bill Ackman said it best: "there's no way students are going to pay it all back."
"Of the subprime vehicle loans bundled into securities, 73 percent now exceed five years, up from 64 percent during the first three months of 2014. 'Because cars depreciate quickly, a borrower is typically upside down or underwater toward the end of a long loan term.' 'The risk is that you extend a loan that a borrower cannot afford over its term schedule. Inching out to 75 and 84 months, I don’t think that has been tested yet.'"
The fox is guarding the henhouse at America's colleges and universities as accreditors slap a seal of approval on schools with subpar graduation rates, clearing the way for government aid to flow where it shoudln't and further imperiling the US taxpayer in the process.
"Over the last couple of decades, we have been engaged in an enormous national experiment, taking impressionable and often ignorant teenagers and young adults and seeing just how much student loan debt they can handle.There is a practical question at hand for people who feel as if they are in over their heads: Is it ever a good idea to try to beat the system by openly defying it and refusing to repay the debt that you willingly took on?"
In what looks like the latest threat to the US taxpayer stemming from the government's trillion-dollar student loan portfolio, VC-backed tech startups are using attractive refi offers to siphon off the best loans, leaving taxpayers with a book full of IBR enrollees and severely delinquent borrowers who aren't even thinking about making payments.
It just blows our mind, that in the face of almost every indicator having collapsed over the first 6 months of this year, market ‘pros’ just act as though it isn’t happening! It’s impressive to watch the insanity, the denial, the delusion, that has become the basis of the steady state market. What is continuing is us extending ourselves again on the very assumption that the American Consumer will rebound to its peak strength. Because there are those few all powerful economic cannibals that profit on policy rather than economics, we will continue down this flawed path until the legend of the Almighty American Consumer succumbs to reality. And that day my friends will be an ugly one for the record books.
The Department of Education says it will forgive federal student loans made to Corinthian Colleges students who can prove they were victims of fraud. The potential cost to taxpayers: nearly $4 billion. With the precedent thus set, the question now is whether continued pressure on for-profit colleges will result in further closures and more petitions from hundreds of thousands of students with hundreds of billions of loans they now know can be legally discharged.
"I'm making a good salary and I'm doing all these things that I'm supposed to be doing. But you're just not able to save enough to get to that number. Housing is so inflated."
There are some valid points raised in Lee Siegel's 1100 word rant against college loans (if not so much against college education). There are some bad ones. But two things are is clear: the words "personal" and/or "responsibility" were used precisely zero times, and the op-ed writer, who described himself as "the author of five books who is writing a memoir about money", is hardly a glowing advertisement for an education attained (funded with either debt or equity) at one of the Ivy League's "best", Columbia University... that, or the return on money after wasting nearly a decade in university and taking out tens of thousands in loans to achieve a Master of Philosophy degree.
The Fed sees no risks of bubble trouble because they are looking at it all from the 2008 perspective. That is completely wrong-headed; if there is a “next one” it will have nothing to do with subprime mortgages, or even mortgages and real estate. Everyone seems to simply assume that the subprime problem ended in 2008, if only by crash. That is true but only of mortgages. Deleveraging is myth as debt has still expanded, and greatly, just not in the same exact places. There are certainly auto and student loans that have exploded exponentially, especially in subprime categories, but if there is another credit bubble now, the third, it is undoubtedly corporate debt.
"Bernanke & Greenspan Have Destroyed America" Schiff & Maloney Warn "People Don't Realize What Is Coming"Submitted by Tyler Durden on 06/03/2015 17:00 -0400
Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn't want you to seeas "people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time." The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar - Bernanke "took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning." The air is coming out of the bubble, they warn, "Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming..."
May was a banner month for car sales and it's easy to see why. Nearly every conceivable metric for financing hit a record in Q1 according to Experian, including average loan term and average amount financed, suggesting the trillion-dollar US auto loan market has officially hit bubble territory. Meanwhile, the "cash out auto loan" is the new home equity loan.