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Student Loan Bubble Cracks With Pulled Sallie Mae Bond Deal

Tyler Durden's picture




 

In 2007 a small number of French hedge funds imploded over sudden losses stemming from highly leveraged bets made on the unstoppable subprime mortgage market. At the time, a few saw the writing on the wall; but many simply wrote it off as just another over-levered hedge fund and the subprime mortgage market was 'fine'. Fast forward six years and as we have discussed numerous times (most recently here and here) there is a bubble, potentially far bigger than subprime, in student loan debt. As one of the last remaining outlets for state-sanction credit creation, this is a big deal; but, of course, the popping of the bubble (or even a slight leak) is eschewed since there is so much 'reach for yield' and the Fed's got your back. That is until this week. As WSJ reports, Sallie Mae (SLM), the nation's largest non-government student lender just cancelled a $225 million debt offering as investors  decided they simply were not getting paid enough for risk - amid rising student loan defaults. Simply put, there's a limit to what investors will tolerate.

 

 

SLM was offering a stunningly low 3.5% interest on the deal and investors snubbed it, "There are certain limits that can't, or shouldn't, be crossed if you're an investor," adding that, "we're beginning to see what the tolerances are." This is a significant shift since SLM and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012. With the portion of student borrowers who are late on their debt payments by 90 days or more climbing to 31% in 2012, from 24% in 2008; we wonder if this is the tipping point for the student debt in 2013 that was generally ignored in subprime in 2007, until it was too late.

 

Via WSJ,

Student-loan company Sallie Mae SLM -1.35% canceled a $225 million bond offering on Thursday after about two weeks on the market, according to people familiar with the deal. The move may mark a line in the sand: Investors whose thirst for yield has revived all manner of riskier asset classes decided they weren't getting paid enough to buy at the offered price amid rising student-loan defaults.

 

...

 

Sallie Mae pulled the plug on an offer for $225 million in bonds.

 

The yield hunt has revived the markets for securities backed by troubled mortgage loans and loans to borrowers with less than pristine credit, known as subprime. But even in these markets, there are boundaries.

 

"There are certain limits that can't, or shouldn't, be crossed if you're an investor," said Christopher Sullivan, chief investment officer at the United Nations Federal Credit Union. "Now we're beginning to see what the tolerances are."

 

Investors were demanding more interest than the 3.5% coupon Sallie Mae was offering on the bonds,...

 

Sallie Mae and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012, according to Bank of America Merrill Lynch data.

 

Securities backed by student loans have become popular for the extra yield they provide over safer debt, despite a significant rise in defaults on such loans. Overall, the portion of student borrowers who are late on their debt payments by 90 days or more climbed to 31% in 2012, from 24% in 2008, the Federal Reserve Bank of New York said in a recent report.

 

In the case of the canceled Sallie Mae offering, rising defaults could have crimped the cash flow of the federally backed loans supporting the new securities, because more defaults would mean less excess, or residual, income after holders of the original loans were paid.

 

...

 

Investors have been buying up securities backed by everything from troubled mortgages to loans to subprime borrowers looking to buy cars. Analysts expect the amount of securities backed by assets sold this year to outpace last year's $197 billion total.

 

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Mon, 04/29/2013 - 08:23 | 3509457 ihedgemyhedges
ihedgemyhedges's picture

"Simply put, there's a limit to what investors will tolerate."

What's an "investor"??????????

Mon, 04/29/2013 - 08:35 | 3509485 jeebus
jeebus's picture

Great question. I feel like 99% of the bond market is just giant funds, mostly pensions, trying to keep themselves propped up. Whatever you want to call it, it is a bubblish scheme.

Mon, 04/29/2013 - 08:53 | 3509548 negative rates
negative rates's picture

Teach your parents well.

Mon, 04/29/2013 - 09:04 | 3509573 Proofreder
Mon, 04/29/2013 - 09:03 | 3509576 gmrpeabody
gmrpeabody's picture

This, like, really sucks, man. I mean, it's not like I was going to get a really high paying job even after I get my Masters in Parks and Rec, but now they are telling me, like, I can't take it to the next level. Dude, these guys aren't as smart as they think they..., cause, like, I wasn't planning on paying off my student loans anyway, man.

Mon, 04/29/2013 - 10:27 | 3509832 dark pools of soros
dark pools of soros's picture

Kids and mom's do not care about student debt at all... My niece is ready to ratchet up this debt next year withno care her major will never pay it off... Perhaps it's just the best way to get married

Anyway this bubble is the same as food stamps and military... They won't pop until the country goes tits up

It fuels the economy so it will never turn off. They don't care about inflating the dollar. Same story guys

Mon, 04/29/2013 - 10:44 | 3509903 negative rates
negative rates's picture

Yea, lets just call the whole thing off.

Mon, 04/29/2013 - 10:53 | 3509955 malikai
malikai's picture

.

Mon, 04/29/2013 - 12:32 | 3510386 Panafrican Funk...
Panafrican Funktron Robot's picture

Sounds to me like the Fed is about to enter the student loan business in a fairly substantial way.  They already co-opted a large chunk of privately held property via the MBS purchasing scheme, it would make sense that the next logical step is to own the rights to any potential productive labor through non-dischargable debt.  Ain't slavery grand!  

Mon, 04/29/2013 - 10:32 | 3509844 NoDebt
NoDebt's picture

Their mistake was calling on PRIVATE investors.  Call the Fed- they'll buy that crap.  They're buying every piece of crap debt that isn't nailed down.

Ben Bernanke = the financial equivalent of Mikey from the old Life Cereal commercials.  He'll eat anything.

Just that Mikey died in a tragic accident involving and overdose of Pop Rocks (as we all well know who are of an age to remember this stuff).  Ben will die being crushed by his own ego, most likely.

Mon, 04/29/2013 - 10:53 | 3509966 malikai
malikai's picture

EVERYONE RELAX! Mikey isn't dead.

It's just an urban legend.

Now get back to work, slaves.

Mon, 04/29/2013 - 20:17 | 3511904 Radical Marijuana
Radical Marijuana's picture

99% of everything has become an ourboros of incorporated robbery.

Nobody else could compete with the governments' powers to rob, while those who were able to benefit from the privatization of that power to rob have runaway with that. Thus, we have developed a system where more than a hundred thousand government mandated funds, many of which are just giant funds, mostly pensions, now dominate the ownership of all publicly traded companies.

Thus, the power to rob was channelled through governments around and around through a more and more bogus "private sector," to gradually become the situation were "collective government" owns the economy, that it regulates, for its own benefit. Meanwhile, in that flow are those who are positioned more favourably to stick in their paddles and divert some of that towards their private benefit.

However, the bottom line is that nobody else can complete with the governments' powers to rob, and therefore, after that has grown and grown, the economy is totally dominated and owned by the various agenecies of "collective government" that run everything throughout, both coming and going, while those who make private profit primarily do so by being positioned to be able to stick their personal paddles into that overall flow of organized social robbery, and so, divert some of that flow into their own private accounts.

For all practical purposes, everyone is now a debt slave to themselves! Moreover, the younger they are, the more impossibly in debt they have become to themselves. Since the overwhelming vast majority of people do not want to understand what is really going on, we can expect a tiny minority to be able to continue to pretend to extract their private profits, from a system which has actually become almost completely "collective government" coming and going, through an ouroboros of incorporated robbery.

Mon, 04/29/2013 - 08:42 | 3509505 Sudden Debt
Sudden Debt's picture

That would be you...

They took your 401K with a mix of taxdollars.

Invested it for you.... and the government will get a 5% return on it, lose the principal and raise your taxes as a thank you gesture.

HERE'S A FREE BEERPONG!!!

FUCKYEAH!!! THAT'S WHAT GOING TO COLLEGE REALLY IS!!!

 

Mon, 04/29/2013 - 08:57 | 3509554 augie
augie's picture

 

HERE'S A FREE BEERPONG! FUCKYEAH! THAT'S WHAT GOING TO COLLEGE REALLY IS! 

+1 QFT.

Mon, 04/29/2013 - 10:11 | 3509780 onewayticket2
onewayticket2's picture

Ever wonder why it costs $50k/yr?   the professors - like Fauxcahontas - teaching one class and getting $350k/yr, tenure and a sick benefits package.  and your kids are taught by their teaching assistant, not the professor.

Mon, 04/29/2013 - 10:54 | 3509988 malikai
malikai's picture

They really are doing it for the kids.

Mon, 04/29/2013 - 11:11 | 3510066 SafelyGraze
SafelyGraze's picture

more datas:

ucsd administrators 250k

professors about half that

http://ucsdcalrev.files.wordpress.com/2012/02/ucsd-faculty-salaries-revi...

 

Mon, 04/29/2013 - 11:05 | 3510034 SafelyGraze
SafelyGraze's picture

fact check:

http://4.bp.blogspot.com/-il3hP6zdLpQ/TbjPhgonNkI/AAAAAAAAPQE/NWj9R89M1k...

maybe it's not the professors after all

Mon, 04/29/2013 - 11:21 | 3510122 onewayticket2
onewayticket2's picture

$257K/year for 3-4 hrs a day of lecture x 9 mos per year.  not bad.

that's about what, $250+/hr.?  with tenure.   (and this doesnt count the best part....the benefits, the pensions, the healthcare, ...just the cash)

Mon, 04/29/2013 - 12:35 | 3510391 Panafrican Funk...
Panafrican Funktron Robot's picture

"the benefits"

Indeed, the availability of young, stupid females with compromised morals and a willingness to "do what it takes" to get a passing grade, would be just one benefit.  

Mon, 04/29/2013 - 11:31 | 3510161 RafterManFMJ
RafterManFMJ's picture

War is a racket.

'Education' is a racket.

Hell, racket manufacturing is likely a racket.

Fascinating how the entire US is one giant lie.

 

 

Mon, 04/29/2013 - 11:35 | 3510173 Meat Hammer
Meat Hammer's picture

Not to mention the prof requires you to buy the textbook supplement he authored for $80 which will be opened once during the semester.

Mon, 04/29/2013 - 08:44 | 3509511 tango
tango's picture

My son, after squandering his college days, has decided to return and get a certificate in vehicle repair (he can strip and build a car).  He needed another 4K and someone suggested Sallie Mae.  He got the loan on-line without reading the terms and is on the hook for 12% interest.  I called and the nice lady said rates were sky high due to....high default rates.  I asked if they checked the credit records of their applicants.   "But it's a student loan," as if that was somehow an excuse.  She did add that "nobody oays these things back on time."  Tell me about it.

Mon, 04/29/2013 - 09:13 | 3509597 Poetic injustice
Poetic injustice's picture

If you sign things without checking first, you deserve to get ripped off.
I mean, there are multiple ways to raise 4,000. He chose one of most expensive.

Mon, 04/29/2013 - 09:33 | 3509679 InvalidID
InvalidID's picture

 

 I work as a debt collector specializing in student loans. You can NOT imagine the number of loand that go unpaid, nor the people most likely to not pay.

 

 I'll give you a hint though, the most likely loans to go unpaid EVER... Are in the 6 figures and held by people in the 6+ figure income.

Mon, 04/29/2013 - 09:51 | 3509736 onewayticket2
onewayticket2's picture

Checkout SoFi. loans.  they are a private solution....much lower rates (and exacerbating the problem at sallie, etc. by stripping out the good loans from the crap)

Mon, 04/29/2013 - 10:06 | 3509760 Che Guevara is Dead
Che Guevara is Dead's picture

Here's what we can do for those kids falling behind repaying their loans and struggling to find decent jobs.

Teach them gunsmithing and farm them out cheap to Colt, S&W, and the other gun makers. Put them to work making ammo and guns so that we don't have to look at bare shelves for both at our favorite gun shops. 

 

 

Mon, 04/29/2013 - 10:25 | 3509822 aerojet
aerojet's picture

That's funny, but it won't help.  S&W quality is out the window and is never coming back. 

Mon, 04/29/2013 - 19:18 | 3511694 billsykes
billsykes's picture

just rebuild 4 cars or 8 on the super cheap - 8 weekends, done. 8 happy hemmi people, no debt.  

At $500 bucks a pop you would have people lined up around the block. 

Mon, 04/29/2013 - 12:36 | 3510253 H E D G E H O G
H E D G E H O G's picture

Okay Guys, lets not bash the Student Loan Bubble! I have to let you guys know that I just received my Diploma from Phoenix University. Thats right. I'm now a certified & have in my possession, (framed and over my computer, to admire and inspire, with a $20,000.00 .gov loan), a Baccalaureate of Bullshit Baffling. The Headgehog is open for business and is taking on a first come, first served basis, ground floor opportunity for ALL ZHer's to ease their minds about their investment portfolios. We're a brick and mortar investment company with a real brick and mortar post office box .    HEDGEHOG ENTERPRISES, PO BOX OU812, BUMFUCK, NIGERIA, 66666. We will be offering to the astute investor a   w  i  d  e diversivication of products, including, but not limited to, US BONDS! WE GUARANTEE to beat the going rate of any Us Bond, thats right, we will pay out -4% if the sovereign is -3, we pay -5% if it goes to -4% and so on to a maximum of -100%! Where can you beat that!? The answer is NO where! Treasuries you ask? Shit, we offer treasuries at a rate of BUY 3 GET ONE FREE! BUY 4, YOU'LL WANT MOAR! FIVE AND YOU'RE IN THE jIVE! SIX, PIK UP STIX, and so on. ETF'S !!! We offer any and every ETF that can be conjured up! From our new AIR ETF(HIGHLY PROFITABLE), all the way down(excuse the pun) to our Earth(as in dirt), or Water ETF. WE AGAIN, GUARANTEE DELIVERY UPON REDMPTION!!! CURRENCY WARS! Don't sweat it. Our Harbinger Fund will make you wealthy beyond belief. For every $1000.00(minium), we will purchase through legitimate markets, 590,000,000,000,000,000.66 Fresh, new Zimbawbe Dollars! That's right! Shipped at OUR expense to your garage, or any other legal address in the lower 48 states. (with all of your neighbors jealously looking through your garage door windows, you might need a Doberman(or similar facsimile), just in case. We  can handle that too) CHARTS! We've got CHARTS! We've got charts of charts, we've got charts of how many times your neighbors dog shits in your yard, we've got charts out the ying yang! CHARTS GUARANTEEING 100% DAYLIGHT TOMORROW! Hows that for accuracy? *(DISCLAIMER) Unfortuntely at this time, we can ONLY accept gold or US dollars sent to our PO box. THAT'S IT FOLKS! This is not a prospectus, but an offer to make you as wealthy as the 1%er's. All Funds, exclusive of our largest Fund, the Made Off Growth Fund, are 100% stable and backed up with the full faith and credit rating of HEDGEHOG LLC., LLP., INC., ETC.  "YOUR CASH & GOLD ARE OUR ONLY CONCERN"......Thanks for your patience.

 

ps. through intensive research, we have found that informing your wife, or significant other(s), about this offer to become a REAL ONE PERCENTer, could be detrimental to your earning$.

Mon, 04/29/2013 - 17:21 | 3511336 RafterManFMJ
RafterManFMJ's picture

He speaks truth! Only last month I completted my thrid University of Phoenix degree, this one in 'how to manage a fund.'  Now I only owe 170K in student loan, but am on fast trax to managering my own fund. So I take other money and make it grow!

Thanks you again University of Pheonexx! You are a lifesaver.

Mon, 04/29/2013 - 08:25 | 3509458 Cursive
Cursive's picture

You know the financial system will be healthy when no one will be interested in CDO's of any stripe.

Mon, 04/29/2013 - 08:26 | 3509462 GetZeeGold
GetZeeGold's picture

 

 

Obamacation.....here we come!

Mon, 04/29/2013 - 08:31 | 3509480 I Am Not a Copp...
I Am Not a Copper Top's picture

Or Re-hypobamacation

Mon, 04/29/2013 - 08:45 | 3509513 urbanelf
urbanelf's picture

Or colateralized debt obamabligations?

Mon, 04/29/2013 - 08:55 | 3509545 TeamDepends
TeamDepends's picture

What is the one common trait of all commie utopias?  They exist ALWAYS in the future!!!!

Mon, 04/29/2013 - 17:25 | 3511340 RafterManFMJ
RafterManFMJ's picture

Just like fusion power. It's only 10 years away, and has been for the last 50 years.

Mon, 04/29/2013 - 09:04 | 3509574 Diogenes
Diogenes's picture

Obligodamnations?

Mon, 04/29/2013 - 08:25 | 3509464 22winmag
22winmag's picture

Student loan bubble bursting? Told you so.

 

We are all nations of squatters squatting on the ruins of once-great civilizations. In Europe and the rest of the world they know this. They are sad, defeated peoples.

 

However, America has only been around for a few seconds on the 24 hour clock of human civilization and it doesn't matter if we are a "once-great civilization" or not... we are too young to know it... or even care.

Mon, 04/29/2013 - 08:27 | 3509465 Dingleberry
Dingleberry's picture

No prob. Ben will just buy this garbage too, and add it to the collection.

Mon, 04/29/2013 - 08:35 | 3509486 JohnGaltsChild
JohnGaltsChild's picture

Truer words were never spoken. you're a prophet.

Mon, 04/29/2013 - 08:53 | 3509537 francis_sawyer
francis_sawyer's picture

That dude must be rich!... Oh wait...

Mon, 04/29/2013 - 10:05 | 3509763 onewayticket2
onewayticket2's picture

After "bad bank" ben bernanke buys the junk, those who have been paying responsibly and those who have chosen non Sallie, private sources of funding will be punished by being left out of the forgiveness.

 

it should happen right before the 2014 election cycle....massive forgiveness.....obama will rationalize that "we cannot sit idly by while 'tomorrow's leaders' are swamped with debts they cannot pay"

 

just wait. 

Mon, 04/29/2013 - 11:11 | 3510065 DeadFred
DeadFred's picture

Don't do that! I could hear his creepy voice when I read your words. I might lose breakfast now

Mon, 04/29/2013 - 08:59 | 3509558 booboo
booboo's picture

Theere is soooo much money laying around in personel retirement plans that will be confiscated and will keep the wheels turning for another decade.

You didn't build that debt but you, your children and your childrens children will pay off the vig to the FOO on the Obamabonds. 

Mon, 04/29/2013 - 10:20 | 3509812 viahj
viahj's picture

why would "they" steal "paper assets" from retirement accounts when they are digitally "printing" billions every month?  if they did, they would have an instant rebellion on their hands as the act alone would crash every equity market on the planet rendering chaos for a few bps less in UST yields.  no, they won't upset the sheep by doing that, they will inflate away.  get your hands on gold for after the reset.

Mon, 04/29/2013 - 10:45 | 3509906 ElvisDog
ElvisDog's picture

Ding, Ding, Ding. Agreed. Why would they steal something that they can create at will? Would an apple farmer go out and steal apples? I think the ultimate plan of bankers, both central and private, is to exchange their fiat, which they can create at will, for all the valuable real, tangible assets on this globe.

Mon, 04/29/2013 - 11:38 | 3510190 Meat Hammer
Meat Hammer's picture

And then when they own everything then they can yank the ejector seat lever.  

Fuck you Bernanke

Mon, 04/29/2013 - 09:05 | 3509577 resurger
resurger's picture

Hy, ig, cds, aapl, au .. wait i made a mistake somewhere

Mon, 04/29/2013 - 08:25 | 3509466 libertus
libertus's picture

It was easy to predict. Many of us did...game over traditional higher ed. 

Here is a good article.http://www.academia.edu/1225678/Blowing_the_Last_Bubble-_The_Frailty_of_...

Here is an excellent twitter feed for the same issues. https://twitter.com/Oplerno

There is big change comming to higher ed...Its going to be good. 

 

 

 

Mon, 04/29/2013 - 08:31 | 3509476 GetZeeGold
GetZeeGold's picture

 

 

From that feed.....no I'm not kidding.

 

Oplerno@Oplerno27 Apr

Pay tuition and faculty with Bitcoin? Why not?

Mon, 04/29/2013 - 08:39 | 3509502 LawsofPhysics
LawsofPhysics's picture

"Pay tuition and faculty with Bitcoin? Why not?" -  Why not?  Duh, because their creditors and the banks/companies they do business with don't accept bicoin.  How fucking stupid.  Why don't farmers accept bitcoin? Because the people they deal with (fuel and fertilizer companies) don't accept bitcoin.   Stupid sheep.  Holders of physical are going to love the coming shit-show of scams and "solutions".

Mon, 04/29/2013 - 08:48 | 3509518 tip e. canoe
tip e. canoe's picture

(fuel and fertilizer companies)

and those are needed why? ;~)

Mark Shephard on Restoration Agriculture

http://www.youtube.com/watch?v=kb_t-sVVzF0

p.s. was not aye who junked

Mon, 04/29/2013 - 09:12 | 3509610 LawsofPhysics
LawsofPhysics's picture

The junkers have no response based on fact.  People want to be paid in something they know without a doubt cannot be gamed, period.  Bitcoin suffers from it's own complexity.  The average Joe cannot comprehend the technology and simply knows that it can be unplugged.  Talk till your blue in the face, the average Joe would sooner be paid in beer.

Mon, 04/29/2013 - 09:20 | 3509626 Bearwagon
Bearwagon's picture

Being paid in beer has been proven and tested long ago. It works fairly good.

Mon, 04/29/2013 - 09:22 | 3509634 tip e. canoe
tip e. canoe's picture

yeah, Shephard talks about alcohol in that talk as well.   and if you make it all the way to the end, he also talks about his "sunflower cartel".  

oil + alcohol = food + fun + fuel.  

it's pretty cool, you should give it a listen.  it's a presentation given to working farmers, not your average fluffy-duffy permie video.  

Mon, 04/29/2013 - 08:48 | 3509522 libertus
libertus's picture

Good point Laws, but I was thinking of using bitcoin to pay faculty overseas. It is much easier to transfer payments of tuition and salary that way then going through a bank. There are lots of issues with bitcoin, but it is easier to transfer payment with that then physical gold or silver. However, I agree that holders are going to make a killing in the next several years. 

Mon, 04/29/2013 - 08:51 | 3509534 GetZeeGold
GetZeeGold's picture

 

 

Tyler just picked up Western Union as a sponsor. 

 

Why not use them.....hell of a track record. Unless you don't care about the flashcrash......just sayin.

Mon, 04/29/2013 - 08:58 | 3509562 negative rates
negative rates's picture

Look, he's aiding and abetting criminals again.

Mon, 04/29/2013 - 08:55 | 3509553 kito
kito's picture

@laws....you are off base...im not a fan of bitcoin....yet...but its making its way into commerce little by little...there are a few buildings in nyc that are beginning to accept bitcoin for rent and maintenance payments..........i imagine the building needs this rent and maintenance money to pay for repairs, oil, staff, etc...........

 

http://www.prlog.org/12113502-tenants-can-now-pay-rent-and-maintenance-in-bitcoin.html

Mon, 04/29/2013 - 09:21 | 3509631 LawsofPhysics
LawsofPhysics's picture

See my post above.  The average working person does not give a shit.  They are either complacent sheep that are afraid just want to be cared for or they are trademens that want to be paid in something they know without a doubt cannot be gamed.  They do understand that if the power goes down, no fucking bitcoin and most would sooner be paid in beer.  Bitcoin suffers from it's own complexity.  Bitcoin does me no good (for now) as I can't buy large quantiites of diesel or fertillizer.  Although I thought I saw a link  for buying ammo using bitcoin but can't seem to find it now.

Mon, 04/29/2013 - 10:01 | 3509751 kito
kito's picture

yes, you are correct that the average joe wouldnt know what bitcoin is.......but its breaking into commerce....and as the economy continues to tank and trust in the govt declines, it will become more prevalent....

Mon, 04/29/2013 - 10:31 | 3509855 A82EBA
A82EBA's picture

Kito, it seems difficult/confusing to me on how to buy bitcoin. DO you have a link on the steps in plain-english?

Mon, 04/29/2013 - 10:47 | 3509922 francis_sawyer
francis_sawyer's picture

Here's the best place to start

~~~

http://www.youtube.com/watch?v=in8b1XQfGeU

Mon, 04/29/2013 - 11:02 | 3509989 A82EBA
A82EBA's picture

thanks

"..and it's gone..", i hear you, i just want a small position, my depositor assets seem to be more at risk of being cyprused than bitcoin

Mon, 04/29/2013 - 10:57 | 3509995 kito
kito's picture

sorry, not a clue. as i stated, no interest in it right now................................

Mon, 04/29/2013 - 11:22 | 3510128 SilverIsKing
SilverIsKing's picture

ShitCoinTM

Mon, 04/29/2013 - 10:46 | 3509934 ElvisDog
ElvisDog's picture

Do you really think that if bitcoin ever became a perceived threat to the system, that TPTB would leave it alone? Bitcoin depends on the Internet for its existence and the government controls the infrastructure that makes the Internet work. 2 + 2 = ???  Hello??????

Mon, 04/29/2013 - 10:19 | 3509795 Its_the_economy...
Its_the_economy_stupid's picture

@Libertus

Thanks for the link. I printed it in color, bound it and put it in my reception area. Eyes wide open.

Mon, 04/29/2013 - 14:27 | 3510731 libertus
libertus's picture

Thanks. Please subscribe to the @oplerno feed. I'll get in contact with you. I'd like to know where you placed that article. 

Mon, 04/29/2013 - 14:25 | 3510732 libertus
libertus's picture

Thanks. Please subscribe to the @oplerno feed. I'll get in contact with you. I'd like to know where you placed that article. 

Mon, 04/29/2013 - 08:30 | 3509471 q99x2
q99x2's picture

Hint: Bernanke. 

Mon, 04/29/2013 - 08:30 | 3509472 kridkrid
kridkrid's picture

Who needs investors when you have the fed.  The fed will "do what's right" to keep kids in college. This bubble will continue until the whole thing collapses.

Mon, 04/29/2013 - 08:31 | 3509474 TeamDepends
TeamDepends's picture

Think about the legions of college grads who, in their early twenties, realize they are deeply in debt with little hope of paying it off.  Could be a hot summer.

Mon, 04/29/2013 - 08:35 | 3509484 Proofreder
Proofreder's picture

... with little hope of paying it off.

 

... with no hope of paying it off, ever.

 

There, fixed it for 'ya.  Reality sucks.

Mon, 04/29/2013 - 09:21 | 3509633 Bearwagon
Bearwagon's picture

Nah, reality is great. It's cognitive dissonance that suck's. (And I don't mean our fellow poster by the same name, he's alright.)

Mon, 04/29/2013 - 10:49 | 3509953 ElvisDog
ElvisDog's picture

Oh, bull fucking shit. College is a wonderland for young adults full of parties, sex, drugs, and endless forms of entertainment. After 4-6 years of living a Club Med existence, college grads are about as far from being able to stage a revolution as they could possibly be.

Mon, 04/29/2013 - 08:32 | 3509477 Seasmoke
Seasmoke's picture

The thing I never understand. With the mortgage meltdown , there were houses to steal and resell again. What is there to take with student loans ???

Mon, 04/29/2013 - 08:39 | 3509494 El
El's picture

It was never about the folks who lost their homes in foreclosure. It was all about the investors in sub-prime mortgages losing money when people began to default. Same with the student loan bubble. It doesn't matter that there is nothing to repossess.

Mon, 04/29/2013 - 10:04 | 3509761 ParkAveFlasher
ParkAveFlasher's picture

The problem with student loans is that they can't be transformed off the shoulders of the indebted, because the lender is defined as society and because the debt is intended to increase the quality of life by effusing society with "knowledge".  It's a complete exercise in farcical high-minded bullshittery that's been Martingale'd passed all visible benefit to anyone. 

I'm saving dry powder for when colleges start liquidating their real assets.  I can always use more hooded sweatshirts and math textbooks.

Mon, 04/29/2013 - 08:37 | 3509497 Proofreder
Proofreder's picture

A percentage of wages from the rest of the sheep's life.  No bankruptcy option. No more credit.

Mon, 04/29/2013 - 08:51 | 3509541 CrimsonAvenger
CrimsonAvenger's picture

Yep. And that's just GREAT for economic growth prospects.

Mon, 04/29/2013 - 08:59 | 3509566 negative rates
negative rates's picture

Your parents sanity.

Mon, 04/29/2013 - 10:36 | 3509860 syntaxterror
syntaxterror's picture

Garnish those McWages!

Mon, 04/29/2013 - 08:34 | 3509481 apberusdisvet
apberusdisvet's picture

Higher education may again be relevant only if the principles of both the US Constitution and sound money are a major portion of the curriculum.

Mon, 04/29/2013 - 08:41 | 3509508 Proofreder
Proofreder's picture

Lower education as well needs to re-embrace teaching basics such as the Constitution (Civics) and money (home economics), beginning in 6th grade.  

Only problem is finding any qualified instructors.

Mon, 04/29/2013 - 08:50 | 3509536 LawsofPhysics
LawsofPhysics's picture

All education needs to embrace failure.  This passing everyone and teaching kids to pass tests is not "education."  If they fail the books, teach them to work a fucking wrench or hammer.

Mon, 04/29/2013 - 08:53 | 3509547 francis_sawyer
francis_sawyer's picture

"The world needs ditch diggers too"

~Judge Smails

Mon, 04/29/2013 - 09:13 | 3509601 Proofreder
Proofreder's picture

Parents need to embrace and learn from their kid's failures - overcoming failure is the greatest learning process by far.

The majority of parents today feel that failure is harmful to self-esteem.

What a crock the "special needs" class has managed to sell society for the last 40 years.

 

Mon, 04/29/2013 - 09:16 | 3509613 francis_sawyer
francis_sawyer's picture

Trophies for 6th place...

Mon, 04/29/2013 - 11:29 | 3510143 SilverIsKing
SilverIsKing's picture

It's trophies for first place, last place, and every place in between.  There really is no distinction between winning and losing.

Mon, 04/29/2013 - 12:43 | 3510414 francis_sawyer
francis_sawyer's picture

losing is the new #winning

Mon, 04/29/2013 - 15:16 | 3510911 Thisson
Thisson's picture

That pretty much sums up our whole society.  Why work when you can get $60k/year in government benefits and a free obamaphone?  Why make prudent investments when you are TBTF?  Why pay a mortgage when you can just default and the bank won't evict you...

Mon, 04/29/2013 - 10:27 | 3509831 aerojet
aerojet's picture

That won't work--there are too many people working wrenches and hammers.  We need knowledge workers very badly.

Mon, 04/29/2013 - 09:17 | 3509625 marathonman
marathonman's picture

Why teach the Constitution?  It was always a stalking horse for Federal take over.  Those separation of powers everyone thinks is so great, becomes an impassable barrier to change once neo-Federalists had taken power from the people - in the name of the people.  Try to repeal The Federal Reserve Act, the Social Security Act, the Welfare Act, The Medicare Act, Medicare Part D, or Obamacare.  Can't happen.  The separation of powers is now an electric fence topped with razor wire protecting the Federal leviathan.  What good is learning the Constitution going to do now when five Supreme Court justices can make it mean whatever they want it to mean?

Mon, 04/29/2013 - 08:34 | 3509482 Never One Roach
Never One Roach's picture

Low Monthly Payments Are [Dealers'] Friend, Not Yours

Yes, most of us know that just focusing on the monthly payment, rather than the overall cost of the car, is a mistake. But that’s not stopping us from taking out loans of five years or longer. Experian reports that the average loan term for a new vehicle jumped to an all-time high of 65 months in the last quarter of 2012, up from 63 months in the last quarter of 2011.

The minute you start talking monthly payments with a dealer you’re in trouble, warns Shattuck.

“If you tell the dealer, ‘I can afford $300 a month,’ all they have to do is play with the loan term and get you the payment you want without getting you a good deal on the car.”

 

http://finance.yahoo.com/news/5-things-car-dealers-wont-060124627.html

 

ALL potential car buyers, esp today's Yutes, should read this article.

Mon, 04/29/2013 - 08:34 | 3509491 Baader
Baader's picture

Can non US residents get oneof these loans you don't have to pay back?

Mon, 04/29/2013 - 10:07 | 3509753 RSBriggs
RSBriggs's picture

Actually, yes.  If you're an illegal immigrant, you can get one of these loans, free healthcare, monthly welfare payments, foodstamps, section-8 housing, paid utilities, no question or income necessary (NINJA) home and auto loans, income tax rebates - even if you didn't pay anything in the first place, and a free cell phone to boot.  And if you're into having kids, the benefits increase by $600 to $900 per month, each.

 And you get to vote!  All you need to do is be a registered Democrat.

Mon, 04/29/2013 - 08:37 | 3509496 Ignorance is bliss
Ignorance is bliss's picture

Higher education gets you nothing but debt and a great 4 year party on someone else's dime. The 4year degree is part of the old paradigm and we are past that. Colleges haven't taught important workplace skills for decades.

Mon, 04/29/2013 - 08:43 | 3509506 q99x2
q99x2's picture

Mandarin is a difficult language to learn.

Mon, 04/29/2013 - 08:56 | 3509550 Ignorance is bliss
Ignorance is bliss's picture

And yet a billion plus Chinese have managed it.

Mon, 04/29/2013 - 15:18 | 3510917 Thisson
Thisson's picture

It's funny, but I have never met a Chinese person yet who has had any trouble with thier language.  It's English that they seem to have difficulty with, but I can't really say I blame them since our American kids have a tough time with English, too.

Mon, 04/29/2013 - 08:44 | 3509520 LawsofPhysics
LawsofPhysics's picture

Yeah, all that knowledge regarding biochemical pathways and the metabolism of drugs is not important and can be simply learned through osmosis.  Boy, I really don't want my doctor knowing anything about that. < sarc. off >  Careful what you wish for, in this case it sounds like you want idiocracy.  In many fields of study, there is real expertise and some hard core foundational knowledge that must be learned before the real training (through apprenticeships not classrooms) can begin.  This can take years.  But hey, if you are comfortable working for an asian, go ahead, cut all funding for education and R&D in America.  Your choice.

Mon, 04/29/2013 - 08:55 | 3509546 Ignorance is bliss
Ignorance is bliss's picture

Doctors follow a script based on obamacare. You have what you feared.

Mon, 04/29/2013 - 09:09 | 3509590 LawsofPhysics
LawsofPhysics's picture

Bullshit.  MD/PH.D. types looking for new solutions follow no script.  You follow a script if you don't want to evolve.  Like I said, cut all funding for education and R&D, just be sure your Mandarin is good.

Mon, 04/29/2013 - 09:15 | 3509615 Proofreder
Proofreder's picture

@ Ignorance is ...

Mighty blissful, ain't'cha.

Moniker says it all.

Mon, 04/29/2013 - 11:02 | 3510031 aerojet
aerojet's picture

Oh, please!  There's a large gulf between fixing higher education in the US and "cutting all funding."  Colleges and Universities did just fine before the days of free money baroque excess, and they will adjust back and be better off for it. 

Mon, 04/29/2013 - 09:37 | 3509691 moonman
moonman's picture

Spoken like a bitter dropout

Mon, 04/29/2013 - 09:57 | 3509745 Never One Roach
Never One Roach's picture

Pre-Columbian Basket Weaving Master's degree is a b*tch! Especially with all those young nubile nymphs around....this can take years of hard work.....

Mon, 04/29/2013 - 08:40 | 3509500 orangedrinkandchips
orangedrinkandchips's picture

Not getting paid for Risk? WTF? WHO THE FUCK CARES?? IT'S NOT THEIR MONEY!!

 

Fuck it then....BUY TREASURIES SINCE THEY COMPENSATE YOU FOR RISK!

 

(SOOOOO fucked up....what I learned in school and jobs is that more risk, more return. No way. Now we get bond where YOU PAY THEM interest!! WHILE THE RISK IS THE HIGHEST EVER).

 

lie-bor is the kicker.....Risk goes parabolic and we go sub 100bps???

 

Reminds me of STRIPES...where Dewey Oxburger (John Candy) comes clean about being overweight!!! classic!

 

Mon, 04/29/2013 - 08:40 | 3509504 LawsofPhysics
LawsofPhysics's picture

NIRP a ZIRP - yeah, buy treasuries < snicker snicker >

Mon, 04/29/2013 - 09:04 | 3509579 negative rates
negative rates's picture

And then he wonders why he's late to work everyday.

Mon, 04/29/2013 - 08:44 | 3509510 buzzsaw99
buzzsaw99's picture

A THIRD OF THEM ???!!! HOLY FUCK BATMAN!

Mon, 04/29/2013 - 08:42 | 3509512 wisefool
wisefool's picture

But the debtors have very good and expensive degrees. They will figure out a way to pay it back!

Mon, 04/29/2013 - 08:48 | 3509516 artvandalai
artvandalai's picture

This has got to send shivers down the spine of University Presidents and their tenured faculty. If the loan spigot is turned down where will they be able to get their annual 8% tuition increases?

The Fed will probaably start buying sallie maes. They need some diversification away from just treasuries and mortgage backs.

Mon, 04/29/2013 - 08:51 | 3509532 LawsofPhysics
LawsofPhysics's picture

Bullshit, I worked my way through school.  To be honest I'll bet the professors would be happy to see smaller class sizes with less idiots and everyone in class actually interested in learning.  Shocking isn't it.  Yes, the administrators might be upset, but gee, let's take a look at their salaries compared to those actually doing the work.  I think this is the single common propblem across the board in all professions.  Those actually delivering the service are not being compensated relative to those bankers or administrators.  Fuck em, let it burn.

Mon, 04/29/2013 - 09:04 | 3509571 Bearwagon
Bearwagon's picture

The professors would be amazed to see classes of people who actually want to learn, which is very different from expecting to be taught something.

Mon, 04/29/2013 - 09:10 | 3509592 LawsofPhysics
LawsofPhysics's picture

Bingo.

Mon, 04/29/2013 - 09:10 | 3509595 bill1102inf
bill1102inf's picture

There is no such thing as 'working your way through school' anymore.  

Mon, 04/29/2013 - 09:38 | 3509694 LawsofPhysics
LawsofPhysics's picture

Bullshit.  My son is doing just that.  maybe not at Harvard or Princeton, but fuck them.  Wake the fuck up, lots of opportunity out there, just not at the same old corrupt insitutions.  If that's the limit of your "vision", you are indeed fucked, others are not however.

Mon, 04/29/2013 - 09:12 | 3509602 artvandalai
artvandalai's picture

You say it's BS but then you sound like we agree.

Mon, 04/29/2013 - 09:23 | 3509651 libertus
libertus's picture

Actually if you take a look it is senior tenured faculty that as a group are driving up the salary costs to unsustainable levels. 

Mon, 04/29/2013 - 09:28 | 3509673 mendigo
mendigo's picture

So true - that is exactly how they would feel about it (after all it is such a bother having to actually perform the job for which you were hired and receive pay).

Then the discussions of paycuts and layoffs and adjustments of pensions would begin in earnest - how rude!

You are so correct, thank you.

Mon, 04/29/2013 - 09:43 | 3509708 LawsofPhysics
LawsofPhysics's picture

Full disclosure, my bussiness is my "pension", so yes, I will work till I die.  Fuck em, let it burn.  There is indeed value to true education, but that involves a real desire to learn and acceptnce of failure.  Parents today are idiots, many forgetting or forbidding their own children to have or experience the very same hardships they endured as they worked towards their own successes.  Totally stupid.  I will also add that I use to to take high school kids as interns over the summer.  That was until a kid injured his leg jumping out of a hay loft (something that was against the rules to begin with) and his folks tried to sue us.  These parents are the fucking problem, fuck them, helicopter parenting is an understatement.

Mon, 04/29/2013 - 11:06 | 3510041 aerojet
aerojet's picture

The faculty have not been beneficiaries of this system!  Tenure track positions have become harder to find.  The biggest beneficiaries have been high-up administrators, bankers, and construction companies.

Mon, 04/29/2013 - 08:49 | 3509525 kito
kito's picture

but....but....when i took out that student loan to pursue my dream of liberal arts i was promised a life filled with riches!!!!!!!!!..i was told the loan would give me the AMERICAN DREAM!!!........amex platinum card................new bmw lease every 3 years............a beautiful hacienda with mermaids in the swimming pool!---oh wait, not that one.....that was simon black's promise.........i was told the loan would give me ALL THAT AMERICAN OFFERS................and now..............all im offered is a lifetime of DEBT SERVITUDE!!!!!!!!!!!

Mon, 04/29/2013 - 08:58 | 3509555 Ignorance is bliss
Ignorance is bliss's picture

If you want all that then you need to become a banksternlaundering money for criminal enterprises.

Mon, 04/29/2013 - 09:10 | 3509584 negative rates
negative rates's picture

Your folks conned you into that idea, you know, you get one job, and it pays for everything. Now start that list of things you need and hop to it.

Mon, 04/29/2013 - 08:46 | 3509527 timbo_em
timbo_em's picture

A shiny 1 gazillion platinum coin to back bonds backed by student loans should do the job!!?

Forward, comrades! Inflate moar!

Mon, 04/29/2013 - 08:48 | 3509531 stateside
stateside's picture

And so it begins ..................

Post says Royal Bank shuts down Bitcoin accounts

2013-04-29 07:49 ET - In the News

 

The Financial Post reports in its Saturday edition Joseph David has overcome a lot of challenges since starting up Canada's first Bitcoin exchange two years ago but his latest hurdle is proving tougher that all the others. The Post's John Greenwood writes Virtex, based in Calgary, is an on-line market that matches Bitcoin buyers with sellers, with about $13-million of trades under its belt. Earlier this month, however, Royal Bank of Canada told Mr. David that it would no longer do business with his company. "They shut down our account without any reason," said Mr. David, an ebullient entrepreneur with a background in technology companies. "They just said we have the right to refuse service to whomever we wish." Many Bitcoin operators are suddenly dealing with the same problem: The banks have decided they do not like the cryptocurrency and they are shutting down some of the accounts of businesses that deal in it. Bitcoin is supposed to be an alternative currency designed to operate outside of the conventional banking system, but in practice Bitcoin holders are constantly swapping back and forth into real dollars, partly because of speculation and partly because there is not that much you can buy with it.

Mon, 04/29/2013 - 09:18 | 3509632 adr
adr's picture

The minute you could trade dollars for Bitcoins and vice versa, Bitcoin was dead. It no longer became about operating outside the system, but how many dollars you could make speculating on Bitcoin.

The creators and early miners of Bitcoins all had the same idea. Hope Bitcoin goes through a speculative bubble and get rich offloading early stashes of Bitcoins that cost virtualy nothing. Bitcoin speculators helped make the people who run the Magic the Gathering Online Exchange obscenely wealthy. MAGIC THE FUCKING GATHERING!!!!! Where's the Pokemon Bitcoin Exchange? Bitcoin supposedly came from Japan right?

The creators of Bitcoins believed the true eventual value of one Bitcoin is in the hundreds of thousands of dollars range. Pretty good if you mined one of the first blocks of 50 Bitcoins two years ago. Might have cost you $20 in power. Based on some wiki page you should be sitting on at least $5 million. Bitcoin was always a get rich quick scam. The repeated speculative bubbles and near infinite division of a Bitcoin proves that.

If Bitcoin was a true alternate currency and medium of exchange, it would be accepted as such without any need to exchange other currencies for it. Nearly all volume on Bitcoin exchanges is not for obtaining Bitcoins to purchase goods, but to hope to exchange Bitcoins for greater value of dollars later on. A classic herd mentality speculative bubble.

Mon, 04/29/2013 - 10:07 | 3509770 Disenchanted
Disenchanted's picture

I'm sticking with my really valuable Beanie Baby collection...fuck that magic shit.

 

/s (just in case)

Mon, 04/29/2013 - 10:55 | 3509997 ElvisDog
ElvisDog's picture

I think tulips are the next big thing.

Mon, 04/29/2013 - 15:23 | 3510934 Thisson
Thisson's picture

You would have made a ton of money buying magic the gathering cards when they first came out, too.

Mon, 04/29/2013 - 10:11 | 3509772 RSBriggs
RSBriggs's picture

-1 for talking out your ass.

Mon, 04/29/2013 - 10:39 | 3509891 Tinky
Tinky's picture

Thanks for the thoughtful, and impressively supported rebuttal.

Mon, 04/29/2013 - 08:53 | 3509538 firstdivision
firstdivision's picture

Woah, woah, woah people.  Bernanke said that the loan risk was "contained".  See, nothing to worry about.

Mon, 04/29/2013 - 08:55 | 3509544 Juggernaut Nihilism
Juggernaut Nihilism's picture

*continues to add to pile of Jan 2014 and later SLM puts I've been accumulating over the last six months*

Mon, 04/29/2013 - 08:59 | 3509551 22winmag
22winmag's picture

It's not student loan debt... it's a "commodity" to the bought, sold, traded, and speculated upon.

 

All state run schools and most state-subsidized for-profit institutions of higher learning amount to little more than pimples on the ass of society IMHO.

Mon, 04/29/2013 - 09:09 | 3509591 negative rates
negative rates's picture

Is it your job to check for those kinds of things, or are you an inside man?

Mon, 04/29/2013 - 08:57 | 3509559 andrewp111
andrewp111's picture

Sallie Mae is a GSE. Therefore, Bernanke (or his successor, Old Yeller) can legally buy Sallie Mae bonds. That will be the next iteration of QE.

Mon, 04/29/2013 - 08:59 | 3509563 Ignorance is bliss
Ignorance is bliss's picture

If students can't get loans then they can't become debt slaves. Obviously, unacceptable to those in charge.

Mon, 04/29/2013 - 09:11 | 3509599 negative rates
negative rates's picture

I will create a way for you to become a slave to your car, no need to be a slave to anyone any more.

Mon, 04/29/2013 - 09:01 | 3509564 adr
adr's picture

So Ally has been selling securities backed by Yolanda's subprime loan for her Chevy Cruze?

Well I guess securities backed by EBT payments have less risk than a mortgage security backed by the payments from anyone with a middle class job.

Another wonderfull part of living in Obamica.

Mon, 04/29/2013 - 12:30 | 3509739 ebworthen
ebworthen's picture

ObamaBushClintonMcCainSchumerica

Mon, 04/29/2013 - 09:05 | 3509582 Shevva
Shevva's picture

 Easy threaten 'em with a solo sell in Gitmo if they don't pay.

Mon, 04/29/2013 - 09:20 | 3509638 Proofreder
Proofreder's picture

The solo cells at Gitmo are full because of the ongoing hunger strike.  Try again.

Mon, 04/29/2013 - 09:14 | 3509603 ebworthen
ebworthen's picture

Why should any student pay the loans back when banks have rigged rates and securities/deriviative markets, and governments have bailed out said banks with taxpayer money?

Mon, 04/29/2013 - 09:29 | 3509664 Rory_Breaker
Rory_Breaker's picture

That's not how this ponzi works!

Mon, 04/29/2013 - 09:29 | 3509666 Proofreder
Proofreder's picture

Why, you ask ???

Simply put, the financial folks will harass and follow you for the rest of your life to continue to squeeze money out of you.  For the rest of your natural life and then your kids beyond.  They have no mercy.  They don't have to.  Pay up, you owe us and have no other choice.

Do NOT follow this link or you will be banned from the site!