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Consumer Credit Soars As US Government Encourages Student, Car Loan Bubbles

Tyler Durden's picture




 

That US consumer credit soared by $21.4 billion in March on expectations of $9.8 billion rise, or the fastest monthly expansion since March 2001 would have been commendable and memorable if one did not dig through the actual components. Which sadly are atrocious: of the entire surge, a modest $5.1 billion was from real credit, or revolving, credit-card type debt. This brought the total revolving debt to $804 billion or to a level first crossed in January 2005. The balance, or $16.2 billion, was non-revolving debt, or the type of debt used to fund GM car purchases by subprime borrowers and push the student loan bubble well into its $1+ trillion record territory. The total non-revolving debt is now $1.739 trillion: an all time record. As for the source of such debt? why the US government of course, in what is the supreme ponzi scheme, whereby the US government allows US consumers to purchase Government Motors products and to keep the Higher Learning status quo in power. In other words, the US government has become the final enabler of the consumer spending bubble with proceeds used to keep the US auto unions happy (as channel stuffing is already at record high levels), and of course, to fund such ancillary student purchases as iPads. As for whether any of this debt will ever be paid off? Don't be silly.

Monthly change in revolving and non-revolving credit:

Indexed change in these two series:

The various sources of consumer credit - one stands out:

And just government sourced credit vs all others, courtesy of John Lohman.

 

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Mon, 05/07/2012 - 15:34 | 2404417 redpill
redpill's picture

That's the spirit, let's blow this fucker up sooner instead of later!

Mon, 05/07/2012 - 15:38 | 2404429 Dr. Richard Head
Dr. Richard Head's picture

Blowing it up in style.....behind the wheel of a Cadillac.  NICE!!!!

Mon, 05/07/2012 - 15:41 | 2404452 redpill
redpill's picture

Introducing Apple iDubs, the 23", $8,000 chrome rims for your Cadillac Escalade that automatically notify your Facebook page when they need polishing and sets up an appointment with your local detailer using your Chase(tm) card (extra fees apply, 24,99% APR) so you ALWAYS stay ballin'!

Mon, 05/07/2012 - 15:52 | 2404487 Ahmeexnal
Ahmeexnal's picture

Daniel Suelo is an example to follow:

http://www.dailymail.co.uk/news/article-2138738/Daniel-Suelo-voluntarily...

Footage has revealed the sparse and yet contented life of Daniel Suelo - the man who has chosen to live without money for the past 12 years. Suelo, now 51, renounced money in 2000, left his last $30 dollars in a phone booth and walked into the desert to start a new life in Moab, Utah.

'The fact is, if everyone lived like the average American, the world would actually collapse more quickly than if everyone lived like Suelo.'

Mon, 05/07/2012 - 16:05 | 2404538 redpill
redpill's picture

Living in squalor eating roadkill?  I hardly think that's the only option.

Mon, 05/07/2012 - 16:13 | 2404560 economics9698
economics9698's picture

I prefer squirrel meat.

Mon, 05/07/2012 - 16:36 | 2404630 francis_sawyer
francis_sawyer's picture

This week I'm buying a Cadillac Escalade so I can drive to the University of Phoenix in my pajamas...

Mon, 05/07/2012 - 18:25 | 2404928 Slewburger
Slewburger's picture

I'd rather wear my Ed Hardy shirt and drive my Hummer on dubs, I'm almost done with my RE license BTW.

Mon, 05/07/2012 - 18:44 | 2404985 Skip
Skip's picture

Now that's just funny.

Mon, 05/07/2012 - 16:59 | 2404718 GOSPLAN HERO
GOSPLAN HERO's picture

In Africa, it's called bush meat.

Mon, 05/07/2012 - 18:46 | 2404989 Skip
Skip's picture

It is also called that in London and the Bronx and Brooklyn. Tons of "bush meat" including gorilla paws, sold in both of those NYC boroughs each year.

Mon, 05/07/2012 - 23:35 | 2405489 GMadScientist
GMadScientist's picture

I find Protestants too stringy.

 

Mon, 05/07/2012 - 16:37 | 2404631 A Nanny Moose
Mon, 05/07/2012 - 21:47 | 2405323 Bicycle Repairman
Bicycle Repairman's picture

Suelo is a cop out.  Somebody's car is making that roadkill.

Mon, 05/07/2012 - 23:14 | 2405455 smb12321
smb12321's picture

Why would anyone is their right mind want to regress to feudal times?  Money is one of the greatest inventions of history and as such, can be manipulated and put to bad use.  I can't see much for humanity if we're scrounging for grub worms half the day and staring at our naval the other half.

Mon, 05/07/2012 - 23:34 | 2405486 GMadScientist
GMadScientist's picture

"if everyone lived like the average American, the world would actually collapse more quickly than if everyone lived like Suelo"

If everyone lived like Suelo, Suelo couldn't live like Suelo.

Mon, 05/07/2012 - 15:41 | 2404453 battle axe
battle axe's picture

You might get your wish, look at the Student Loan numbers, that fucker is ready to blow apart big time, very soon. 

Mon, 05/07/2012 - 16:03 | 2404531 duo
duo's picture

It will blow when the interest on student load debt exceeds the total of all tuition paid in the US.  I think we're at about 60% now. 

 

Mon, 05/07/2012 - 16:12 | 2404554 economics9698
economics9698's picture

It will blow when the public realizes the inflation rate is higher than the interest rate on their government bonds.

Mon, 05/07/2012 - 16:49 | 2404687 Shizzmoney
Shizzmoney's picture

It will blow when the majority of the public knows what "inflation" and "interest rates" actually are.

Mon, 05/07/2012 - 17:07 | 2404734 max2205
max2205's picture

Well, it just blows. Period

Mon, 05/07/2012 - 16:18 | 2404568 Omen IV
Omen IV's picture

many kids / people  are living off the student loans / credit cards- education be damned - the disability applications for SS are soaring as Unemployment benefits run out - parallel tracks necessary for survival of many many people  - as they pull the availability of these programs and unemployment Insurance simultaneously there will extreme response   - one / ten / 100 / 1000 people will freak out and go postal

too many guns too many desperate people

Mon, 05/07/2012 - 16:22 | 2404582 redpill
redpill's picture

That's right, this is AMERICA!  People will not stand by idly and see the streaming Netflix video on their iPhone throttled by their carrier, they will not tolerate their $145 cable TV budget curtailed, and by god if you even think of touching our $4 mocha latte cappucino we will fucking riot, do you hear?!?!!

Mon, 05/07/2012 - 16:24 | 2404586 12ToothAssassin
12ToothAssassin's picture

Earth can realistically sustain about 1 Billion people. Something has to give and Im pretty sure it wont be reality or the physical world around us.

Mon, 05/07/2012 - 16:35 | 2404626 redpill
redpill's picture

Nonsense, we haven't even begun to explore the theoretical limits of sustainable population.  The problem is that we've (and primarily our governments that think they are smarter than everyone else and can centrally plan these things) not expanded or behaved in a sustainable fashion.  There will be countless problems as long as we continue to make stupid choices.

Mon, 05/07/2012 - 17:39 | 2404806 12ToothAssassin
12ToothAssassin's picture

"...behaved in a sustainable fashion.  There will be countless problems as long as we continue to make stupid choices."

 

Exactly how I arrived at my number - come to think of it Im revising down to 500B.

Mon, 05/07/2012 - 23:18 | 2405461 smb12321
smb12321's picture

No, the powers that wannabe are creative in one sense - they can ALWAYS find a way to obfuscate, ignore, bypass, modify or alter debt in all its glorious forms.  We'll have new laws, yet more DC programs, lots of Sunday morning gabfests and of course nothing will change.

Remember that State control of education debt was a prime goal for the Prez.

Mon, 05/07/2012 - 15:44 | 2404462 orangedrinkandchips
orangedrinkandchips's picture

Reminds me of Booger on Revenge of the Nerds....

 

"I say we blow the fuckers up"......

 

this is how democracy becomes socialism then communism then back into democracy...repeat if necessary.....

 

right in front of your eyes....

Mon, 05/07/2012 - 15:57 | 2404508 redpill
redpill's picture

the tree of liberty...

 

Mon, 05/07/2012 - 17:35 | 2404800 Virginian
Virginian's picture

...is getting pissed on.

Mon, 05/07/2012 - 15:37 | 2404418 RacerX
RacerX's picture

Wow. And here I am looking at getting a new[er] car. Guess that makes me a Muppet too.

I like #1 comment. Just like in Goodfellas.. They buy as much sh* as possible, then burn the joint down.

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

Mon, 05/07/2012 - 15:39 | 2404438 LawsofPhysics
LawsofPhysics's picture

Same as it ever was.  The governement will pretend to make some loans so that these kids can pretend to get educated and pretend to pay it all back.

All the while, what you know remains secondary to who you know.

I love the smell of napalm in the morning.

Mon, 05/07/2012 - 15:47 | 2404474 battle axe
battle axe's picture

Also if these  poor kids with huge debt try to declare bankruptcy because of their student loans, they can not, by law, let the bankruptcy effect their student loans. The loans must be paid back with interest in full, the only debt that can not be modified by a bankruptcy court. So with unemployment running at 50+% for new graduates, we have a whole new class of serfs in America, "The land of the free", (unless you have a student loan). 

Mon, 05/07/2012 - 15:54 | 2404497 Chupacabra-322
Chupacabra-322's picture

@ battle axe, That's what those re education FEMA camps are for.  New grads won't be unemployed for very long. 

We have now exhaustively proven in a series of articles that the U.S. Army is training its personnel, through the policies outlined in a manual entitled FM 3-39.40 Internment and Resettlement Operations (PDF), to “indoctrinate” “political activists” incarcerated in detention camps into developing an “understanding and appreciation of U.S. policies and actions.”

On page 281 of the manual we even see the use of the term itself when we learn that the role of camp personnel is focused around, “reorienting or reeducating the I/R facility population or setting the stage for acceptance of future operations.”

These camp prisoners are to include “civilian internees” detained “within U.S. territory” as part of “civil support operations” in the aftermath of “man-made disasters, accidents, terrorist attacks and incidents in the U.S. and its territories” involving FEMA and the Department of Homeland Security.

The manual also directs such prisoners to be used for slave labor “In work that is needed to construct, manage, perform administrative functions for, and maintain the internment facility,” in other words building and maintaining their own detention camp.

The manual also directs that political activists be confined to isolation and that prisoners be silenced using by “muffling them with a soft, clean cloth tied around their mouths and fastened at the backs of their heads.”

http://www.infowars.com/would-the-media-be-interested-if-bashar-al-assad-set-up-re-education-labor-camps-for-political-dissidents/

Mon, 05/07/2012 - 16:34 | 2404619 resurger
resurger's picture

When you cant borrow another buck from the bank & cant buy a booze

"You bust the joint out, you light a match"

 

 

Fuck, so why not ... they print this money ne way and they borrow at negative interest rates, we might as well get a cut ...

Lets party, party, party

Mon, 05/07/2012 - 15:34 | 2404421 Boilermaker
Boilermaker's picture

LEVERAGE THE BASTARDS!

Mon, 05/07/2012 - 15:57 | 2404506 GeneMarchbanks
GeneMarchbanks's picture

"If we all join hands and go buy a new SUV, everything will be all right," - Bob McTeer, Dallas Fed governor

Mon, 05/07/2012 - 16:19 | 2404574 Iwanttoknow
Iwanttoknow's picture

10,000 up arrows.

Mon, 05/07/2012 - 16:11 | 2404551 chunga
chunga's picture

"LEVERAGE THE BASTARDS!"

Exactly, OCC, SEC, DOJ, can't figure any of this out but a carpenter from MA sure can.

Borrowers are NOT Parties to Asset Backed Securities. WRONG. Bob the Builder explains why.

"If there was no timely assignment to the Trustee within the proscribed period as set forth above, there can never be one."

Another awesome Amicus Curiae filed by a Pro Se in the MA SJC.

He'll be making oral arguments in re: HSBC, et al [plaintiff-appellee] vs. Jodi Matt [defendant - appellant) to the high court.

 

Mon, 05/07/2012 - 16:37 | 2404634 12ToothAssassin
12ToothAssassin's picture

When is his accidental death scheduled?

Mon, 05/07/2012 - 16:55 | 2404660 Boilermaker
Boilermaker's picture

Swimming pools generally open for the summer season on Memorial Day.  I'm guessing sometime shortly thereafter.  Then again, I've heard of people drowing in a bath tub also and / or making toast while bathing.  So, hell, you never know for sure.

Mon, 05/07/2012 - 15:36 | 2404425 carbonmutant
carbonmutant's picture

Bailouts for everybody, just in time for the Elections...

Mon, 05/07/2012 - 15:37 | 2404426 lizzy36
lizzy36's picture

And all we got for borrowing a record amount from the future is 2% GDP growth.

BRILLIANT.

Bernanke must be happy. After all going back to the exact same behavior that put Yanks into this crises, can only be considered a success by the Central Planners.

Mon, 05/07/2012 - 15:45 | 2404447 Sam Clemons
Sam Clemons's picture

* -6% real GDP growth.  And GDP/GNP measures are mostly useless for determining quality of life.  For example, building something and then destroying it makes GDP look good.  I am not a huge fan of the Kennedies, but..

"The Gross National Product includes air pollution and advertising for cigarettes, and ambulance to clear our highways of carnage.  It counts special locks for our doors, and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior.  It grows with the production of napalm and missiles and nuclear warheads... And if GNP includes all this, there is much that it does not comprehend.  It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike.  It does not include the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate or the integrity of our public officials... GNP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country.  It measures everything, in short, except that which makes life worthwhile; and it can tell us everything about America - except whether we are proud to be Americans."  Robert Kennedy


Mon, 05/07/2012 - 15:44 | 2404463 Henry Chinaski
Henry Chinaski's picture

+1

All that debt shoulda goosed the economy.  It's worse than I thought.

Mon, 05/07/2012 - 15:50 | 2404427 fuu
fuu's picture

I've got no debts
To hold me down
To make me fret, or make me frown
I had debts
But now I'm free
There are no debts on me

Mon, 05/07/2012 - 15:38 | 2404435 debtor of last ...
debtor of last resort's picture

I just bought a Ford Ponzi from my Greek bond earnings. Needed just a bit money from my comexcard.

Mon, 05/07/2012 - 15:39 | 2404441 DavidC
DavidC's picture

I wish I could say 'Unbelievable' but it's no longer necessary. Sheesh.

DavidC

Mon, 05/07/2012 - 15:40 | 2404448 BigMike
BigMike's picture

This make me question the breakout in consumer discretionary + staple and technology stocks. What happens when current students cannot find adequate work to pay off their debt?

Mon, 05/07/2012 - 15:46 | 2404473 Doubleguns
Doubleguns's picture

What happens when current students cannot find adequate work to pay off their debt?

 

They throw a full blown temper tantrum, occupy shit, break shit and make other peoples lives miserable, not just thier parents.

Mon, 05/07/2012 - 16:03 | 2404532 Ahmeexnal
Ahmeexnal's picture

What happens when current students cannot find adequate work to pay off their debt?

They become willing murderers in wars thousands of miles away.

Mon, 05/07/2012 - 17:14 | 2404752 ThisIsBob
ThisIsBob's picture

Not to mention retail sales.  What happens if the government stops "giving" people money to spend?

Mon, 05/07/2012 - 15:40 | 2404451 YesWeKahn
YesWeKahn's picture

Bernanke vs. American people

Bernanke 1, American people 0.

Mon, 05/07/2012 - 15:46 | 2404461 bob_dabolina
bob_dabolina's picture

What happens when the government gives anyone with a heartbeat an education?

...higher prices

http://nces.ed.gov/fastfacts/display.asp?id=76

Obviously higher prices make it less affordable, but maybe that's the name of the game. Make the people reliant and incapable of putting themselves through schools. It gives the government more power.

Imagine what would happen to the price of gasoline if every one of the 45 million people on food stamps were given $200 monthly gas vouchers in perpetuity?

Mon, 05/07/2012 - 15:43 | 2404465 Uchtdorf
Uchtdorf's picture

This crisis too shall pass...like a monster-sized kidney stone.

Mon, 05/07/2012 - 15:46 | 2404471 Rainman
Rainman's picture

Still failing Ally Government Bank owes the UST $12 billion, and nobody has any idea how it can possibly pay it back.

http://www.reuters.com/article/2012/05/07/us-allyfinancial-idUSBRE84603T20120507

 

Mon, 05/07/2012 - 15:48 | 2404479 SheepDog-One
SheepDog-One's picture

I guess they'll just 'inflate' it all away like all the other debt...what could possibly go wrong?

 

Mon, 05/07/2012 - 16:22 | 2404583 resurger
resurger's picture

D******

Mon, 05/07/2012 - 16:33 | 2404616 Agent P
Agent P's picture

No worries.  They can just default on all their above market rate CDs and use the depositor cash to payoff the Treasury investment.  The FDIC will step in and make the depositors whole by tapping their LOC at Treasury, so in effect Treasury pays itself back...everybody wins!!!

Mon, 05/07/2012 - 15:50 | 2404483 orangegeek
orangegeek's picture

And yet somehow there are still those that think the markets will climb.  Possible, but not probable.

 

Here's a look at a SP500 weekly - broken 7 month support.

 

http://bullandbearmash.com/index/sp-500/weekly/

Mon, 05/07/2012 - 15:51 | 2404489 realtick
realtick's picture

Thanks for breaking that down.

Mon, 05/07/2012 - 15:52 | 2404493 NotApplicable
NotApplicable's picture

Whenever I go to the teller window at my credit union they ALWAYS pitch a car loan.

Every. Single. Time.

Given the number of repos that are always sitting in their lot, I can't imagine they aren't doing anything other than front-running some undisclosed Fed/gov program. Otherwise, they aren't going to last too long, having to absorb the depreciation on all of these new cars (they aren't the cheaper models, either).

Tell me, just where's the ROI here, when they're lending at 2.79% for four years?

Oh, wait, compared to ZIRP, that's infinity!

Mon, 05/07/2012 - 15:58 | 2404515 tahoebumsmith
tahoebumsmith's picture

The mother of all bubbles. Fighting the debt crisis with more debt. When this keynesian pipedream implodes, it's over...This time for the count.

Mon, 05/07/2012 - 15:59 | 2404519 razorthin
razorthin's picture

NO credit is "commendable" Tyler, NONE.  Not until the Fed and FR banking are toast.

Mon, 05/07/2012 - 16:01 | 2404527 mayhem_korner
mayhem_korner's picture

 

 

The learning curve is broken.

Mon, 05/07/2012 - 16:43 | 2404666 12ToothAssassin
12ToothAssassin's picture

The learning curve is a circle

Mon, 05/07/2012 - 16:11 | 2404541 Poetic injustice
Poetic injustice's picture

I'd like a car loan with my Triple Fat Cheesy BigMac. For desserts, 2 liters of extra sugary bad coffee and student loan.

Mon, 05/07/2012 - 16:12 | 2404557 Stuck on Zero
Stuck on Zero's picture

Add in a prescription for Hopium and you're set.

 

Mon, 05/07/2012 - 16:09 | 2404543 junkyardjack
junkyardjack's picture

Never underestimate American's ability to take on more debt. Bullish...

Mon, 05/07/2012 - 16:13 | 2404556 navy62802
navy62802's picture

Bullish.

Mon, 05/07/2012 - 16:13 | 2404561 the not so migh...
the not so mighty maximiza's picture

Roaring economic times ahead

Mon, 05/07/2012 - 16:18 | 2404569 penexpers
penexpers's picture

STU. DENT. LOANS!

STU. DENT. LOANS!

I'm no fan of Sean Hannity but did anyone see that blabbering OWS idiot on his show the other day?

He didn't even know where the hell his student loans came from...

Didn't the passage of Obamacare include the provision that all student loans will be handed out by the U.S. Treatury Dept.?

 

Mon, 05/07/2012 - 16:38 | 2404643 Shizzmoney
Shizzmoney's picture

He didn't even know where the hell his student loans came from

That's kind of how this all started.  Bascially, they use the fact that kids want to go to college so bad (or are told they have to for a good life) so everyone just ignore the noise and signs away!

I remember at my frist year at Northeastern, I had to take my mom (parents used to be required at the student loan meetings; not anymore) to the Sallie Mae conference.  The shit was way over her head, and mine (altho I did OK for an 18 year old understanding the basics; which is why I left NU a year later when i crunched the HUGE RISING numbers). 

After the thing was done and I signed 1000000000 documents, I felt like a lamb lined up in a slaughterhouse bin.  I'll never forget how much my asshole hurt after that thing.  The whole "student loan industry" is a fucking racket.

Mon, 05/07/2012 - 17:24 | 2404780 aerojet
aerojet's picture

Yeah, unreal, and I went to college in the 90s before the racket really took off in earnest!  The worst part for me was registering for the fucking draft!  I knew right then what a complete goddamned joke our country is.  We're just farm animals.

Tue, 05/08/2012 - 00:30 | 2405547 brettd
brettd's picture

Ever hear folks talk about lowering the cost of an education 

instead of increasing the debt load?

Mon, 05/07/2012 - 16:17 | 2404570 resurger
resurger's picture

You keep nailing the fuckers ,

Mean while for tomorrow:

Tuesday: Party

Mon, 05/07/2012 - 16:20 | 2404575 emersonreturn
emersonreturn's picture

google has another set of lawsuits, motorola as well...it looks like the tech side of the economy, said to be surging...creating jobs and preserving america's edge...could tailspin into litigation rather than research.  google's buying patents from ibm, amazon and microsoft have been lining their patent ducks up, oracle front row, first toe in, all set for apple and google to hoedown in court...there goes their collective cash patties...this while student loans implode, the economy collapses, the fed prints, europe scrambles to paper its world; and germany's sending what sort of missile to isreal to aim at iran? we are indeed blessed to live in such interesting times.

Mon, 05/07/2012 - 17:22 | 2404772 aerojet
aerojet's picture

And Facebook will have a multi-billion dollar IPO, which is also complete horseshit and just represents another giant scam.

Mon, 05/07/2012 - 16:25 | 2404588 midgetrannyporn
midgetrannyporn's picture

There are a lot of new cars driving around. I thought it was just my imagination but it's true. Let the good times roll!

Mon, 05/07/2012 - 16:38 | 2404636 alfred b.
alfred b.'s picture

 

    Earth to Sheila Bair....I'm ready for my 10Million $ bailout now!!

 

 

Mon, 05/07/2012 - 16:41 | 2404653 Seasmoke
Seasmoke's picture

we should have a cash for clunkers on all cars over 9 MONTHS old

Mon, 05/07/2012 - 16:41 | 2404655 goodrich4bk
goodrich4bk's picture

"As for whether any of this debt will ever be paid off? Don't be silly."

Of course it will be paid off --- with interest --- and, no, I'm not being silly.  Student loans are the only debt that can be collected from the debtor's Social Security payments.  No lawsuit needed, just an automatic deduction when the hapless student reaches retirement age.

In other words, direct student loans are NOT taxpayer loans to students.  Rather, they are advances of students' Social Secuirty income, to be repaid with interest.

Neat trick, huh?  It brings forward spending from 50 years into the future and the net present value of the interest exceeds the financing costs, giving taxpayers an immediate profit from every dollar loaned.  Of course, when these students reach retirement and discover they spent their SS checks 50 years earlier on tuition, rent and food, we boomers will be long gone.

Mon, 05/07/2012 - 16:54 | 2404706 12ToothAssassin
12ToothAssassin's picture

I knew I should have taken out student loans because I dont plan on seeing a dime of my SS anyway.

Mon, 05/07/2012 - 17:20 | 2404765 aerojet
aerojet's picture

The epic fucking that this represents will not go unanswered by its victims.

Mon, 05/07/2012 - 21:03 | 2405262 Dingleberry
Dingleberry's picture

Look bitchez.....I spent a ton of time recruiting college kids for Uncle Sam. Here is the deal: some are truly ignorant of the debt that they got themselves into. HOWEVER.....many (if not most) PURPOSEFULLY spent to go to out of state schools, or private ones. Or ones with exciting basketball or football teams.  And don't forget the 'mandatory" spring break trips and "study abroad" vacations, er...excuse me, "semesters". In other words, a lot of these kids spent what they did not have, and knew they did when they did it. And did not give a flying fuck. The future as it pertained to paying back the loans may as well been a thousand years away.  Even their parents co-signed the loans once the banks even said "enough" to the collegiate, usually after obscene amounts lent.  Normally this involved putting the parent's house on the line. In summation, these kids were not like "little red riding hoods". They took advantage of the "free" money that they could get their hands on. And spent the max. And then some.....after all, the newest iPhone is important, you know.  Personally, I think the banks let the loans get so big that they are indeed "to big to default". They took a page right outta the real estate bubble.  Good luck trying to unwind this shit. Got a spare trillion or two?

Mon, 05/07/2012 - 17:42 | 2404814 malek
malek's picture

Exactly, and well explained!

I only wonder what are we going to do when everybody has gotten their college degree?

Mon, 05/07/2012 - 23:06 | 2405437 StychoKiller
StychoKiller's picture

Apply for the Master's/PhD/??? program?

No need to leave the ivory tower and see the big, scary World...

Mon, 05/07/2012 - 17:19 | 2404761 aerojet
aerojet's picture

The student loan debacle might be Wall Street's worst exploitation ever.  It's a revolutionary moment for so many young people.  Higher education will never recover once the unwind finally occurs.  A lot of colleges and universities are going to disappear for good after this thing blows up. 

Mon, 05/07/2012 - 18:03 | 2404863 Omen IV
Omen IV's picture

yes this is the equivalent of the draft in 1969 - it created a huge anti war movement and stopped the war - these kids will finally reach the end of their rope and they will go postal  - slavery produces a reaction sooner or later   

Mon, 05/07/2012 - 17:41 | 2404812 Cynthia
Cynthia's picture

I suspect that President Obama has proposed using Federal subsidies to keep student loan rates artificially low because he doesn't want the higher-ed bubble to burst on HIS watch. But surely he understands that by playing kick the can with the higher-ed bubble he is only add more fuel to it! Surely he understands that by adding more fuel to the bubble he is compounding the damage when it does finally burst! Obama is too smart not to understand this.  
 
This is why I have come to believe that Obama in more concerned about preserving his legacy as a US president than he is in doing his part to preserve higher-education in America, which is to do what he can to lessen the fallout from a higher-ed bubble. But little does he understand that helping make a bubble bigger will be more damaging to his legacy than having a smaller size bubble bursts on him. This is a reflection of his stupidity as well as his shortsightedness.

Mon, 05/07/2012 - 18:19 | 2404913 Walt D.
Walt D.'s picture

"Obama in more concerned about preserving his legacy as a US president". ?????

Currently, he is the worst president that we have ever had. The only two people who are better off after 3 1/2 years of Obama are Presidents Nixon and Carter, who previoulsy shared for this title.

Mon, 05/07/2012 - 23:15 | 2405385 wee-weed up
wee-weed up's picture

I trump your idea that this is a reflection of his (Obama's) stupidity as well as his shortsightedness, and state it is more a reflection of his total lack of morals. He doesn't give a rat's ass about these young people... "Screw anybody necessary to get ahead." It's the Chicago way!

Mon, 05/07/2012 - 18:42 | 2404980 mendolover
mendolover's picture

I actually spent time with someone today who told me one thing they like about Dr. Ron Paul!  I know we're still fucked but it was a nice distraction from CNBS and the presstitutes.  They are getting worse and worse.  I thought Becky Quick was going to give Buffett a bj this morning. 

Mon, 05/07/2012 - 18:55 | 2405011 Skip
Skip's picture

Last month NPR was sending a message about possible forgiveness of Student Loans. Now there was a time I would have thought that would not be a good idea. Yet we let mortgage people, credit card people, go bankrupt yet the people going back to school trying to get an education so they can get a job in nation that sent the other jobs overseas or outsourced or Affirmative Actioned, or VISAed away, get BURIED under debt because even 3rd rate universities charge more and more for tuition and textbooks cost on average about $150 a book. Let me tell you about someone close to me, gets the anthropology book, which is essentially, WHITE = BAD, non-White = GOOD, from the previous semester, but the BITCH COMMIE PROF, uses the NEXT edition, the SOLE change is pagination, that is it, so the $100 spent on the used text, NO GOOD says Comrade Prof, HAVE to buy the new one, again nothing but pagination, so have to spend ANOTHER $165 buying the MFer. So you pay through the ASS and then sit there being told Whites are the DEVIL and minorities are HANDED privileges and so forth and you ask  yourself, WHO IS GETTING SCREWED HERE? And you have the answer already.  If the MFing BANKSTERS can get SEVEN TRILLION DOLLARS of our taxpaying suckers money, which we all are, then MAYBE just MAYBE the government should permit FORGIVENESS on these SCAM STUDENT DEBT, because the teaching jobs are going to Jose and Juanita and LaDorian and Jamila who get a ride, see Bill Gates' MILLENIUM SCHOLARSHIPS...all the way to PhD.

Mon, 05/07/2012 - 20:26 | 2405200 Snakeeyes
Snakeeyes's picture

But look at charts of Federal lending (student loans) versus mortgage loans.

Obviously, the government feels it necessary to create bubbles for political reasons that explode. Then divert rage by creating OTHER bubbles.

http://confoundedinterest.wordpress.com/2012/05/07/consumer-credit-in-u-s-increases-by-most-in-10-years-but-not-for-housing/

Mon, 05/07/2012 - 23:45 | 2405498 holdbuysell
holdbuysell's picture

"..as for the source of such debt? why the US government of course, in what is the supreme ponzi scheme, whereby the US government allows US consumers to purchase Government Motors products and to keep the Higher Learning status quo in power."

So how is it again that Paul Krugman is not conflicted in his views?

If the case of 'to print or not to print' went to a jury and Krugman was on the stand....

...just sayin....

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