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Student Loan Bubble Update: "This Situation Is Simply Unsustainable"
The last time we looked at the most underreported debt crisis sweeping the land, which is nothing short of the second coming of subprime, namely the student loan bubble, we posted "the scariest chart of the quarter" in which the Fed had finally caught up with our prior data showing that student loan delinquency had soared to some 11% from the 9% reported in the previous quarter, even as the Fed disclosed it had issued some $42 billion in Federal student loans in the same quarter, and a cumulative $956 billion, a number which as of December 31 is certainly over $1 trillion. This number was lower than the one we had shown previously, or a default rate of some 13.4%, sourced by the DOE. As it turns out both we and the Fed were optimistic.
According to just released data from Fair Issac:
Research by FICO Labs into the growing student lending crisis in the U.S. has found that, as a group, individuals taking out student loans today pose a significantly greater risk of default than those who took out student loans just a few years ago. The situation is compounded by significant growth in the amount of debt that new graduates are carrying.
The delinquency rate today on student loans that were originated from 2005-2007 is 12.4 percent. The comparable figure for student loans that were originated from 2010-2012 is 15.1 percent, representing an increase in the delinquency rate by nearly 22 percent
And since there is always a lag between getting the full cohort remittance and delinquency data, the real bad loan percentage is likely in the 20%+ category. So $1 trillion in federal student debt now, 20% delinquency, means $200 billion in loan defaults with zero collateral. And rising fast.
This is on par with the amount of subprime loans that was expected to end in foreclosure, yet another number that was vastly optimistic and would have been far worse had the Fed not stepped in to bailout the entire financial system.
And it gets worse. According to FICO:
While the delinquency rate is climbing, the average amount of student loan debt is increasing even faster. In 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years. By contrast, the average credit card balance and the average balance on car loans owed by U.S. consumers actually decreased during the same period.
In a related finding, FICO’s quarterly survey of bank risk managers conducted in December 2012 found that nearly 60 percent of respondents expected delinquencies on student loans to increase over the next six months. The same respondents expected delinquencies on all other types of consumer loans to decrease, putting the pessimism around student loans in sharp relief.
So not only are loans accelerating, but the actual amount of any given loan is rising exponentially.
Some of FICO's scary charts which nobody will pay attention to until it is far too late.
The total percentage of US population with 1 or more student loans has increased from 12.1% in 2005 to 19% in 2012.
The consumer may be deleveraging... in everything but student loans that is: a 58% increase in the average student loan notional in seven years.
And nearly 1% of the population has over $100,000 in student loans!
* * *
FICO's assessment is round in line with outs. "This situation is simply unsustainable and we’re already suffering the consequences,” said Dr. Andrew Jennings, FICO’s chief analytics officer and head of FICO Labs. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default. There is no way around that harsh reality.”
Yes there is: PRINT!
full FICO report below
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Hopefully this wont affect the lavish compensation most overfed acedemics have bestowed upon themselves.
There go my dreams of becoming a College Football Coach
Worry not! (that part of the circus is self-funding)
They better sustain it otherwise I'm not going to have enough for my home in Costa Rica.
This is the system we have designed, you are told you must have a degree otherwise you will flip burgers or pick up the trash. So in a sense you are bullied into thinking you must get a degree at all costs, risk or no risk.
Meanwhile, if you want a safe income that steadily increases every year, go and become a PhD college professor.
I'd rather play piano at a whore house.
Congress has a piano bar?
that sounds like an alright gig, probably good tips.
To insure that, they removed all shop classes and ridicule those who would like to learn a trade.
But even that is not the case anymore, schools have shifted towards adjunct faculty in order to cut costs associated with real professors. Colleges don't have any incentive to provide students with any tangible skill, only to churn them out after emptying their pockets of any potential loans the student can accumulate to feed the beast. Its going to administrations, sports teams, marketing and otherwise attempting to feed the ponzi.
> Meanwhile, if you want a safe income that steadily increases every year, go and become a PhD college professor.
That's assuming you even manage to complete your Higher Degree - notice the 50% drop-out rate?
http://www.degreeinfo.com/general-distance-learning-discussions/27179-phd-drop-out-rates-why-so-high.html
It's not the research that kills them, rather the writing-up. THAT is the real killer, and failure to submit is THE number one reason for graduates failing to gain their Ph.D. For those who do manage to write up and submit, complete thesis rejection is pretty low: Most get away with minor corrections; some will need major chapter surgery, and a relative few will end up with an M.Phil.
In reality if you manage to publish one or two papers during your Ph.D., then it'll be VERY difficult for the examining panel NOT to award the Degree, unless you have really made a balls-up of the thesis!!
http://www.timeshighereducation.co.uk/story.asp?storycode=410208
The problem is that student loan debts are no longer dischargeable in bankruptcy. A whole lot of "intelligent" people are maxing out their student loan portfolios knowing that if they don't find a job, they don't have a snowballs chance of every paying the money back. But hey, what else you gonna do with your life, Paging Jeff Spicoli!
"just walk away."
Why pay for anything these days?
Obama will extend and pretend the debt will be paid back staring in 4 years. just in time to blame the repubicans
He'll fail. Both parties know the Democrats are in control of the White House and with that comes responsibility for whatever happens over the next 4 years. If we have a debt/bond crisis, there's a very big (metaphorical) gun aimed right at the Democratic party. It may not survive. They may soon wish they'd lost in 2012.
nah, it could be played that the redemopublicrats purposefully failed the negotiations.
they revise history.
The issue is that they have provided the road map to minimal repayment terms and eventual discharge so why would anyone expect anything other than increased enrollment when a cakewalk to get on the gravy train?
Here comes the next fucking bailout.
Buy fucking silver and gold. Fuck you Bernanke and all fucking TBTF's. You assholes deserve nothing less than a painful fucking death.
Sell your mortgage backed securities to the Fed and use that money to make you balance sheet look good as your student loans go south--And never lend any more money. Ever again. Because the student loan debt will forever be on your books.
Which brings up a point, if a bad student loan is on the books at a bank that goes bankrupt can the bank really go bankrupt? Or are they just rolled up to the singulatrity bank at the end?
Used to be most student loans were government-backed (with the bank just doing the application and processing). A few were private arena loans (banks holding the paper).
Fortunately that is no longer the case. ALL student loans are straight from the government now. They "cut out the middle man" a few years ago and eliminated their competition in one stroke. Nice, huh?
So, yeah, it all rolls up to the singularity, basically, whether the bank goes bust or not. Because they never held the vast majority of the paper. The "banks" involvement in this is pretty minimal. The "taxpayer's" involvement in this is absolute.
After I wrote that post, I recalled that change.
What a cluster fuck this is going to be. Kids wont be able to get jobs because the loans they took to get educated for the jobs caused the economy to crash.
Sounds just about right.
And the University scampers away with the cash!
You got it.
Best part is, it's taxpayers who get to hold the bag (again), but who gives a fuck about them at this late hour?
Sure the universities win (payment for properly grooming the young lambs for domestication and eventual slaughter). The REAL winner is big government. Think of the POWER the government now holds over those individuals. Not only have they been given a proper big-government indoctrination they are also much more dependent on government for both sides of their budget- future income AND FUTURE DEBT payments.
THAT is slavery without bars.
If you think it's accidental that government holds all the cards in the world of education you haven't been paying close enough attention. That's where this ALL started. When conservative ideas were vacated from higher education they were lost everywhere else. We're just now starting to see the full horror of it.
They call that a "win-win."
Gold and Silver Bitchez !
thought i would say it as hadn't seen it today! Silver HOD Gold almost
JPM doesn't care. The bonds are insured by uncle sugar.
JPM processes snap/ebt which students are using more frequently now.
Food stamps: Once associated with the poor, now commonly used among college studentshttp://www.washingtonpost.com/blogs/therootdc/post/food-stamps-once-asso...
Time for the administration to shut FICO up like they did Egan Jones.
College- not just for liberal indoctrination any more! Now available with free lifetime debt-enslavement!
I would NOT like to be graduating from college right now. And with a home mortgage-sized debt load on your back from day 1? NO THANK YOU.
If I had it to do all over again I'd become a mechanic, welder, plumber, electrician, or HVAC technician, I think.
jobs are tight, housing wont bottom, cost of living fucks you.. all that competition with people in defined and mandated wage industries.. not to mention food stamps keeping the check on subsidies(direct over the heads of the people working apparently), if you wanna use "real" cash, you gotta deal with the transfers.
well and truly fucked.
but yeah, eventually america will be forced to be competitive, short term though, you can't compete. too many idle hands.
A massive amount of these loans that I see or hear about in my hometown are not to traditional colleges, but to either the online crap, technical schools or even beauty schools. Multiple cases I have heard about of some trailor queen or welfare mom getting a student loan and taking the check and buying a car and not even showing up to any (worthless) class. You think she is concerned about paying it back? So what if her credit score drops from 300 to 200. I also see mass registration at the local community college and then the instructors tell of half the class not showing after a couple of weeks. Nothing but an income stream for either the so called school or the so called student. A lot of people in school but I don't see us getting any smarter.
People are cashing out, and some are investing that money in weapons or PM.
So I'd say education was worth it.
Yes, uncle will blink.
At my school where I teach we actually received formal (and quite elaborate) instructions about how to report students who signed up for classes but never attended, so they can apparently be reported to uncle sammy for taking out loans and not using them for school. Of course any smart kid would simply attend a few classes, drop them before the deadline and make off with the cash.
Still waiting for Obama to pay off the student loan my wife generated by going to a for-profit art school during her mid-life crisis.
Sell one of that bitch's kidneys man.
He said wife, not ex-wife.
don't bore us with details. She can function quite well on a single anyways.
HYPERINFLATION will solve the problem...in 5 years we will all be making a Million a year...though Bread will be $5000 and gold $100000.
Inflation is the answer to all of the debts. Don't be a chump and pay them off. Put them off, until inflation removes them painlessly.
I did that for a while. Paid interest only for four years at 2% rather than pay on the note at 10% (FU BNY!!!).
Thing is, I didn't get a pay raise over that time, either.
Well how do you bet against it?
Too many people go to college. We need more plumbers and fewer graduates in psychology.
"The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water."
-John W. Gardner
maybe a couple of sudent debt slaves dousing themselve in Gasoline in front of the white house...might highlight the situation. Though the media probably won't even report it.
Sure. Then they'll outlaw gas cans.
Oh, wait. Never mind ..
http://www.pointoflaw.com/archives/2012/07/blitz-usa-closes-oklahoma-fac...
If you think these are really "student" loans..where you invision a kid in a Linear Algebra class.....you are wrong...I would bet 60% of these loans are to people..minoritys that may have siad they were going to school......maybe even signed up....but never went to a class....and used the money to party on...I also bet they do not have to show to much proof that says they are going to class or a school....its a social program...and the rules will change about the payback....the government will eat it....because "everyone should have an education"...free of course...SOOOOOO...add another trillion or two to the deficit on just this program....
Making the loan money available to the students to spend on virtually anything was a stupid mistake (or calculated move). If it were to go to the school for tuition/books and other direct costs, it'd make more sense. But the way it's structured, the banks clean up with a fee from every swipe of the card and the "students" can use the loan money for anything they want.
As if Linear Algebra is relevant...
Success is about risk taking, invention, innovation, etc..., not finding the most efficient method for solving a differential equation. The "higher" education system is nothing but one big fucking scam at so many levels and angles.
The student loan is merely the cost of indoctrination to a progressive worldview. It is for the good of all, and thus must ultimately be paid by all so the apparatchiks will owe their masters.
And opposite the mortgage crisis where living rent and mortgage free was courtesy of banks who didn't know shit about chain of custody for documentation, the saps that bothered to live in squalor while paying off their gooberment issued loans will be a new class of suckas. Sure, college educated, but not wise to the ways of grifting their way through society like the indebted masses who demand reparation of their own stupidity.
higher education is a handicap. hard to believe so many buy into it.
You could go to the Velvet Jones institute of technology (VJIT) and learn to be a ho in 6 weeks. Loans paid off in 12 weeks. Gravy after that.
https://www.youtube.com/watch?v=lZVnve5wG0A
One piece is missing...
Crack open the docs on a SLABS and notice the enormous difference between the expected default rates between cosigned and non-cosigned loans.
The one I was using appears to have disappeared from the S&P website, but I'm sure you can take any. The one I read was for non-federal loans.
It was projecting nearly 30% default rates for non-cosigned borrowers, and 13% for cosigned.
Why the difference? Perhaps their model assumes a difference in class or behavior for the two types of students, but on the other hand maybe they are assuming that Mom and Dad will be picking up 17% of the outstanding notional for cosigned loans.
Either way, cosigned loans are increasingly the norm, and as this situation spirals out of control it will take down not only the students, but also their parents who cosigned.
Well, actually, none of that will happen because obviously the government is going to just forgive the federal debt and dictate that private debt be fogiven as well, cushioned by making the lenders whole via some PhD-level math you and I cannot understand.
With it so very clear that students will not be repaying their college loans, and "how to" recently passing "sex" on google trends, I do have to wonder whether college will even be a thing in 20 years.
nailed it
Which is why all you can do is just keep on stacking. EVERYBODY's debt will be forgiven. The so-called reset, if it ever happens, will comprise a universal comprehensive forgiveness program. And EVERYBODY will get to start allllllllll over again - like it never happened!. Its fucking goofy. It pisses me off, and it should piss everybody off, because it is punishing those who supposedly did things right! Fuck was I ever wrong on that score!
Students slayed, mission accomplished - signed the Administration....
I'm gettign a degree in broan surgery , online , at home, while in my PJs ...all for a mere $68,000 (which the college was happy to loan me).
It's so much fun, maybe I'll stay and get a second degree in heart transplants....all from my bedroom, online!!
Well,none of this is important. What is important is to make sure the administrators of these colleges get their $150,000+ in pay plus benefits and retirement. And even more important, the football coaches have to make 1 million + or else the football team will not do well. THAT is what is critical in college.
Students, nope, they are just fodder for the big guys. Keep the pay up. We have a bit of inflation you know. And since they can never default, we have debt slaves for many, many years. Amerika!!
The absurdity and insanity of it all.
gotta shove that excess capacity somewhere. figure 2 fucked with my eyes.
it is sustainable and very !
Here is how it works :
Idiot takes a loan to pay for a worthless degree.
Idiot gets the same job he would have had without the degree to pay for the debt's interest ...
FOREVER AND EVER since he just can't refund the capital !
That slave will pay interest for the rest of his entire life ! And if i was a bank i'd rather get those interests than a 0.88% on a government bond ...
PAY FOR YOUR FREEDOM FOR YOUR ENTIRE LIFE, MAYBE ONE DAY YOU'LL GET IT
Colour me fucking shocked, its not "Sustainable"?
What a fucking suprise, is owt the fucking money lauderers make from thin air, sustainable?
These inescusable examples of human waste will pay a fucking price when this charade ends. Will they fucking not.
how can i make money on this? can i short the taxpayer? haha
Even if the student debtors could pay, why should they? Don't you figuyre that many are waiting for their own bailout?
And, how could they be denied one?
=====
WASHINGTON - The Treasury Department ignored its own guidelines on executive pay at firms that received taxpayer bailouts and last year approved compensation packages of more than $3 million for the senior ranks at General Motors, Ally Financial and American International Group, according to a watchdog report released Monday.
The report from the special inspector general for the Troubled Asset Relief Program said the government's pay czar signed off on $6.2 million in raises for 18 employees at the three companies.
The chief executive of a division of AIG received a $1 million raise, while an executive at GM's troubled European unit was give a $100,000 raise. In one instance, an employee of AIG's Residential Capital was awarded a $200,000 pay increase weeks before the subsidiary filed for bankruptcy.
"We expect Treasury to look out for taxpayers who funded the bailout of these companies by holding the line on excessive pay," said Christy Romero, special inspector general for TARP. "Treasury cannot look out for taxpayers' interests if it continues to rely to a great extent on the pay proposed by companies that have historically pushed back on pay limits."
The inspector general's report accuses Patricia Geoghegan, Treasury's acting special master for compensation, of side-stepping protocol that allowed pay packages at the midpoint of comparable firms.
The government/crapitalists must continue to feed the money vortex. Damon Vrabel's image of a hurricane as a vortex where money feeds the storm is pretty perfect, I think. The basic truth of our current currency is that the Federal Reserve Note must be paid back at interest. (P + I) Prinicpal money M1 M2 M3.. whatever, "exists" in reality. The interest only exists in the future and is dependent on time and it's not real until that time at which it's created. "I" (Interest) may not be brought about and can therefore be said to never exist in the present.
Soooooo...the interest only exists in theory under certain assumptions. If the interest is represented by resources than the interest is finite (assuming a finite world) AND SO THE SYSTEM MUST FAIL. It was made to fail; you all know this. Giving money to "students", welfare folk, old-folk, broke-folk, foreign-folk, DC dicksuckers and on and on and on...is just another reason to bring money into existence in order to feed the vortex which acts to bring all resources to the center. They feed it because they must. If not, it dies. When it dies we get a new money system.
Sooo...Gold Bitchez!
Yeah, I agree:
"Damon Vrabel's image of a hurricane as a vortex where money feeds the storm is pretty perfect."
We are watching social storms forming, & the student loan situation is another facet of those developments.
Zimbabwe ain't giving out student loans...
After paying public workers' salaries last week, the balance in cash-strapped Zimbabwe's government public account stood at just $217, Finance Minister Tendai Biti said on Tuesday.
"Last week when we paid civil servants there was $217 [left] in government coffers," Biti told journalists in the capital Harare, claiming some of them had healthier bank balances than the state.
Keep your eyes on the Development Bank of Southern Africa...money is going to Zim.
Zimbabwe receives $147million loan from Development Bank of Southern Africahttp://southafricanews.wordpress.com/2013/01/27/zimbabwe-receives-147mil...
And...
"However, the new AfDB report, while according priority to harmonization and domestic reforms, does not share this skepticism. It points out the progress made by COMESA in fostering harmonization and regional integration in the financial and trade sectors under its Monetary Harmonization Program. It also makes the case that in fact moving towards a monetary union may correct the very conditions the absence of which skeptics cite against the formation of monetary unions in Africa."
So, as we watch the military incursions and drone implementation...keep an eye on the bankers....Especially a VERY shady
Mr. Rieaz Moe Shaik
Chief Executive Officer of Development Bank InternationalStudent debt got you down? Join the DHS's Team USA Stormtrooper Corps! All debt will be forgiven after 10 years or service or upon death!
Easy one to solve: Study abroad (e.g. India), then come back and get hired as 'minority'. Especially if it is a job with the Gov or a politically Ueber-correct Fortune 100 companies.
Depending on what you study, and where, you might be virtually guaranteed a job. Use your imagination.
I got no problems with student loans provided that they be full recourse to the institutions of higher learning (and their top 50 executives and trustee board members), with a repayment cap equal to 10% of the gross income earned by the graduate in his first 15 years of employment, with interest rates capped at 4% over LIBOR.
Everything in America is a business subsidized by the Federal Government: Education Business; Health Business; Drug Business; Old Age Business; Military Business; AgBusiness; Banking Business; etc.
The entities that deliver these services are nothing more than extensions of the government. There is no accounting; no accountability; no interest in cost-benefit.
How sustainable is any or all of this?
Banks don't lend money anymore. The US government under Obama took that away. The US government is now on the hook for the money. But no worries, you just take on a ton of student loan debt; you graduate not having really learned anything. You can't find a job because a robot is doing the work so you file for unemployment for two years and when that ends you go on disability. Then the US Gov't can garnish you disability check! Problem solved!
There is no doubt that there is a direct correlation between the excessive cost of college and student loans. The truth is, it is the ready availability of college loans that is enabling the usurious rise in tuitions. At the same time, the State has increased and widened financial aid for low income and minority students, causing enrollments to burgeon and burdening enrollment costs for other students.
IOW, the goal post for the student to hit – the targeted tuition price - keeps moving farther and farther away. The loan for an education occurs at the same time the cost of the education goes up further. It’s a Catch -22. The same with a College Savings plan; by the time it’s ready to access, the original tuition target has been moved beyond reach, doubling, tripling or even quadrupling.It’s called loansharking the basic needs of life; it’s banker-designed debt enslavement. The bankers control both ends of the equation. They enable the cost of education to go up, permitting university salaries to go up and all the other costs. And, then, they control the other side by capturing the student and giving him the money to pay the higher costs while charging him interest, via government. It’s debt servitude enabled by a government in the pocket of the bankers. Not only that, it was the taxpayer who set up the state university, who paid for and services it; yet when it’s time for his children to attend that school, here come the bankers who say he needs to partner with them in sending his kids to school.
In addition, the bankers and Congress have brought in low-wage labor, nearly eliminating summer jobs and other part-time jobs that once provided students with money for college. The review of the following book lends some insight into the problem.The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back by Alan Michael Collinge
“Student Loan Scam is an exposé of the predatory nature of the $85-billion student loan industry. In this in-depth exploration, Collinge argues that student loans have become the most profitable, uncompetitive, and oppressive type of debt in American history.
“This has occurred in large part due to federal legislation passed since the mid-1990s that removed standard consumer protections from student loans-and allowed for massive penalties and draconian wealth-extraction mechanisms to collect this inflated debt. High school graduates can no longer put themselves through college for a few thousand dollars in loan debt. Today, the average undergraduate borrower leaves school with more than $20,000 in student loans, and for graduate students the average is a whopping $42,000. For the past twenty years, college tuition has increased at more than double the rate of inflation, with the cost largely shifting to student debt.
“Collinge covers the history of student loans, the rise of Sallie Mae, and how universities have profited at the expense of students. The book includes candid and compelling stories from people across the country about how both nonprofit and for-profit student loan companies, aided by poor legislation, have shattered their lives-and livelihoods. With nearly 5 million defaulted loans, this crisis is growing to epic proportions."
http://books.google.com/books/about/The_Student_Loan_Scam.html?id=lBFoPwAACAAJ
Thanks for that link, JR!
As soon as you understand that the "money" the student "borrows" is MADE OUT OF NOTHING, it becomes clear "that student loans have become the most profitable, uncompetitive, and oppressive type of debt in American history."
Of course, as always, I would say that the necessary monetary revolution must be based on the emergence of new death controls, which the surviving young people will be forced through, and thereby, maybe, eventually come to understand. The established systems are like the result of a "home invasion," whereby a gang of criminals took control over the government of the USA, and forced everyone in the American family to more and more do what those criminals demanded. The younger you were in that American family, the worse that became for you.
We have not seen anything yet. There is no way to understand the established money system without understanding the history of the murder system. There is nothing within the established systems which can be reformed enough! The only theoretical solutions MUST be some monetary revolutions, but those require revolutions in the murder systems, because the debt controls actually depend on the death controls.
The real injustices caused by the established runaway triumphant frauds will automatically get worse, faster. They will eventually force collapses into chaos. The established systems will drive their own psychotic breakdowns. That will be insanely chaotic, with no coherent organization possible. But nevertheless, something may survive through that, and maybe a new system emerg afterwards?
Meanwhile, the established systems have no other solutions for these student loan problems, but even more of the same creating money out of nothing, and forcing even more people to share that burden. THE WHOLE SYSTEM IS NOTHING BUT LEGALIZED LIES, BACKED BY LEGALIZED VIOLENCE, AUTOMATICALLY GETTING WORSE, FASTER, BECAUSE IT IS ALL BASED ON THOSE TRIUMPHANT FRAUDS.
Young people are simply doing their best to adapt to their real circumstances, which were being born into a society which is terminally corrupt and insane, and therefore, destorying their future. They can do almost nothing about that, except continue to go along with it ... The reset to slightly more social sanity must include the death controls, because those are reasons why the debt controls became so deceitful and destructive.
Young people are born into a civilization operating a fraudulent accounting system, which therefore does the best it can to ignore the truth about almost everything. It continues to be able to back up its huge lies with more violence, but therefore, continues to become even more insane! More and more young people may eventually be forced to face those basic social facts?
“Meanwhile, the established systems have no other solutions for these student loan problems, but even more of the same creating money out of nothing, and forcing even more people to share that burden. THE WHOLE SYSTEM IS NOTHING BUT LEGALIZED LIES, BACKED BY LEGALIZED VIOLENCE, AUTOMATICALLY GETTING WORSE, FASTER, BECAUSE IT IS ALL BASED ON THOSE TRIUMPHANT FRAUDS.” – Radical Marijuana
That about says it all, Radical. And a grand conclusion. Thanks!
The system’s main advantage is that it forms cartels of gangs and collectively works against the individual at the behest of the government. As you say, as chaos grows exponentially, the system increasingly destroys itself and “monetary revolution becomes possible.”
This takeover, unfortunately, has replaced America’s republic form of government with the collective power of self-called bankers working against the individual in concert with a captured and corrupt government. It could not have been done without the monetary power and central control of the Fed.
This seems to be the "logical" end game playing through regarding having buildt a TOTALLY FRAUDULENT FINANCIAL ACCOUNTING SYSTEM. The younger you are, the more you are being lied to, cheated and robbed by the political system you were born into ...
Given how totally triumphant the established financial frauds that dominate society ARE, the follow through is going to be automatically getting worse faster, and so, the fleecing will becoming a slaughtering. Those who think that this system can continue for a lot longer are not facing that it is on an exponential growth curve, and therefore, will get worse at an astonishing rate.
Young people have no hope other than for some political revolution. However, there are no reasonable grounds to believe that is possible to be coherently organized. Rather, the probable future is for all of these trends to overlap each other, more and more, faster and faster, causing social psychotic breakdowns. I do not believe in any good outcomes. However, I do believe that things will automatically get way worse, way faster, and therefore, young people will have their lives destroyed and plunged into social choas.
Nothing is new about any of this, except for the phase of the exponential growth curve we happen to be on. Decades ago I was writing that there would be phases of the runaway financial frauds driving society insane, and provoking wars and martial law, through which some creative alternatives might be able to survive and adapt. The only things that are new are that more people are seeing this now, because the doubling of debts has clearly gone beyond debt slavery to be debt insanity.
Of course, I do not know what happens when a debt insanity situation goes through psychotic breakdowns. The fundamental structure of the system is the problem. There are no reforms within that system that could be sufficient. However, the only way that can actually change is that those established systems must continue to drive themselves mad, and thereby destroy themselves. Nobody outside of those systems has enough power to do that. The systems must do it to themselves. We can not really do anything but watch and wait, as the triumph of fundamental financial fraud, through government dominated by runaway organized crime, eventually destroys itself with its own excessive "success."
Surviving through the psychotic breakdown of debt insanity is very problematic. However, until things get way worse (which they WILL DO FASTER) there is nothing else that could be done, but to watch and wait. The established systems are way too powerful for anyone outside of them to take down. They have to destroy themselves first, whereupon there finally might be some opportunities for new systems to survive through that chaos, because then, and only then, monetary revolution becomes possible.
Any recommendations for a retail investor to capitalize on this bubble popping???
I dont have access to CDS contracts and the like...
Thanks,
Well, there's always this.
Of COURSE the student loan situation is unsustainable - that's how the fucker was designed!
I have a kid in college who has been taking out loans thru the Department of Education. At first the DoEd sent out regular bills whereby we had to pay the interest on the loans. In the last year or so the DoEd doesn't even send out bills to be paid. We've contacted them and said, "send us a bill" to no avail.
Finally, I told my wife not to bother. If the Gov isn't even interested in sending out a bill there's no sense in trying to pay it back.
Securtise all those crappy loans, tranche them up and flog them to banks. Banks can then bailed out by the Fed stepping in and doing MOAR QE. Problem solved.
I want to get a student loan for the Colorado School of Mines .... then use the proceeds to buy silver bullion coins .... they would almost have to give me an A for the course ?
Not everyone is meant for college. College loans should only be given for the physical sciences that have a chance for a real job.
Each new student a college tries to rope in is basically a piggy-bank with potentially $120k+ of Fed loans, all the school needs to do is lie and cajole the kid into going to their school. This is a race-to-the-bottom type mentality where schools are competing for the most free federal money and so are focused entirely on sports teams, huge adminstrations, all kinds of diversity crap and marketing. Actually providing young adults with skills is a subsidiary concern if its not completely irrelevant to the colleges' administrations. As a student you're nothing but a temporary cash-cow, harvested of your potential loan-money and destined for debt-slavery.
The loans aren't designed to be paid back. The originators know and calculate this beforehand.
They only need a certain percentage of them to be paid back. The key is volume...you have to create a ton of them. And what better way to do that than to have them guaranteed by the federal government.
And if the scheme goes bad, you get a bailout.
I'm begging anybody out there (I know I'm preaching to the choir here) to realize that our system is the most extensive Ponzi scheme ever constructed. The blowup is going be shocking.
In the long run, most Americans will be as impoverished as Latin American peasants....count on it.
If everyone would just vote Democrat in the midterm election then the student loans would soon be swept under the rug , like the 3.12 trillion the FED holds, like the Fannie and Freddie mountain of worthless paper, like the debt ceiling, like the 30 million people who stopped looking for work and no longer count in the BLS stats, like the 2nd amendment, like Gun Walker/Fast and Furious, like the entitlement mess, like the posse commetatus statute, like the GM Bond holders, like the hundreds of millions of dollars in Green Energy losses, like the GM losses, like Gitmo staying open, like .........
If everyone would just vote Democrat in the midterm election then the student loans would soon be swept under the rug , like the 3.12 trillion the FED holds, like the Fannie and Freddie mountain of worthless paper, like the debt ceiling, like the 30 million people who stopped looking for work and no longer count in the BLS stats, like the 2nd amendment, like Gun Walker/Fast and Furious, like the entitlement mess, like the posse commetatus statute, like the GM Bond holders, like the hundreds of millions of dollars in Green Energy losses, like the GM losses, like Gitmo staying open, like .........
As I have said before, you are all ignoring the demonstrable fact that entire communities are living off student loan money, i.e, they are using this money to pay for food and housing, not just tuition. The businesses they buy from are also supported by student loan money, including bars, restaurants, fro-yo shops, physicians, tanning salons, supermarkets, basically everywhere and everyone, as long as there are many colleges present. In San Diego, the end of the student loan program would do more damage than a nuke.
www.zirpinusa.com
Almost everyone, including Tyler seems to be picking and choosing random studies that support their pre-existing beliefs. Fact: FICO and FR use a small sample from a single credit bureau. Fact: Direct Loan reports to the three major credit bureaus but lenders and guarantors generally report only to one, and it may not be the one FICO and FR are pulling from. Fact: FICO's and FR's data sets cannot distinguish between federally-guaranteed loans and private educational loans. They are very different. Fact: FICO's and FR's data sets cannot distinguish between undergraduate and graduate debt, making analyses such as "percent owing more than $100,000" almost completely useless. Undergraduate borrowing limits are very tight on the federally-guaranteed side, and private educational lenders often require a cosigner on undergraduate loans. Fact: Their data sets cannot distinguish loan status, leading to idle speculation. The fact that they cannot identify in-school status, grace period status, etc., leads them (and their fan boys) to subconsciously count these as "pre-defaults" when most are future high earners, future average taxpaying Americans, future struggling consumers, etc., but not defaulters. Fact: Most deferments are for people returning to school after entering repayment -- not to be confused with the in-school status. While their are probably some borrowers, particularly during this downturn, who are tempted to return to school just to get a respite on the monthly billing of their old loans, this is certainly not the majority of returnees, who are likely to be recipients of associate's and bachelor's degrees returning for more education, past stopouts and dropouts looking to complete what they started, etc. Not sure why these would be considered "pre-defaulters" either. Fact: FICO's and FR's data sets focus on "principal balance outstanding," leaving out significant current balances owed by the borrower. Thus, while most of the problems with their data make the student loan debt picture better than conventional wisdom, this one makes it worse by omitting outstanding interest balance, which can be significant for borrowers in default and certain other statuses. Fact: Student loan delinquency is cyclical due to the timing of when a plurality of loans enter repayment. Fluctuations during the year are not scary. Delinquency rates declined during 2001-11 despite two economic downturns. Bad news: an increase since then, primarily due to an increase of high-risk school's loans in the mix. Good news: their enrollment is declining, as are their new loans, so it is possible that the recent increase may reverse. Fact: The sharp increase over the past few years in the "government" section of the Fed's monthly consumer credit release is due to a shift from guaranteed to direct lending and overstates significantly the rate of increase in federal student loan balances overall. Prior to 2010, the vast majority of federal student loan balances were not under "government" but were within the various banking and financial services categories, as they were government guaranteed loans rather than directly owned by Uncle Sam. Fact: The definitions of delinquency and default are very different (and different from in other consumer loans) and the rates cannot be summed, as their denominators are different. Yet reviewers of the same reports (and this is not entirely the fault of those analysts who wrote the reports) tend to further confuse the issue. The percent in default declined sharply from 1990 to 2010, based on factors such as better customer service techniques and removal of extremely high risk schools from the program during 1988-1994. Because the total portfolio has grown, the dollars in default has grown as well, but nowhere near $120b; more like $80b. It is fine to say that in-school, grace period and deferment should not be in the denominator of a "real" delinquency rate. The downside, then, is that you cannot sum up the different "rates" (percent delinquent, percent currently in default, percent currently in deferment, etc.) or you end up with more than 100% because of your reduced denominators. There are many more, but you get the idea. Thank you for taking the time to read.