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Did JPMorgan Pop The Student Loan Bubble?
Back in 2006, contrary to conventional wisdom, many financial professionals were well aware of the subprime bubble, and that the trajectory of home prices was unsustainable. However, because there was no way to know just when it would pop, few if any dared to bet against the herd (those who did, and did so early despite all odds, made greater than 100-1 returns). Fast forward to today, when the most comparable to subprime, cheap credit-induced bubble, is that of student loans (for extended literature on why the non-dischargeable student loan bubble will "create a generation of wage slavery" read this and much of the easily accessible literature on the topic elsewhere) which have now surpassed $1 trillion in notional. Yet oddly enough, just like in the case of the subprime bubble, so in the ongoing expansion of the credit bubble manifested in this case by student loans, we have an early warning that the party is almost over, coming from the most unexpected of sources: JPMorgan.
Recall that in October 2006, 5 months before New Century started the March 2007 collapsing dominoes that ultimately translated to the bursting of both the housing and credit bubbles several short months later, culminating with the failure of Bear, Lehman, AIG, The Reserve Fund, and the near end of capitalism 'we know it', it was JPMorgan who sounded a red alert, and proceeded to pull entirely out of the Subprime space. From Fortune, two weeks before the Lehman failure: "It was the second week of October 2006. William King, then J.P. Morgan's chief of securitized products, was vacationing in Rwanda. One evening CEO Jamie Dimon tracked him down to fire a red alert. "Billy, I really want you to watch out for subprime!" Dimon's voice crackled over King's hotel phone. "We need to sell a lot of our positions. I've seen it before. This stuff could go up in smoke!" Dimon was right (as was Goldman, but that's another story), while most of his competitors piled on into this latest ponzi scheme of epic greed, whose only resolution would be a wholesale taxpayer bailout. We all know how that chapter ended (or hasn't - after all everyone is still demanding another $1 trillion from the Fed at least to get their S&P limit up fix, and then another, and another). And now, over 5 years later, history repeats itself: JPM is officially getting out of student loans. If history serves, what happens next will not be pretty.
American Banker brings us the full story:
U.S. Bancorp (USB) is pulling out of the private student loans market and JPMorgan Chase (JPM) is sharply reducing its lending, as banking regulators step up their scrutiny of the products.
JPMorgan Chase will limit student lending to existing customers starting in July, a bank spokesman told American Banker on Friday. The bank laid off 24 employees who make sales calls to colleges as part of its decision.
The official reason:
"The private student loan market is continuing to decline, so we decided to focus on Chase customers," spokesman Thomas Kelly says.
Ah yes, focusing on customers, and providing liquidity no doubt, courtesy of Blythe Masters. Joking aside, what JPMorgan is explicitly telling us is that it can't make money lending out to the one group of the population where demand for credit money is virtually infinite (after all 46% of America's 16-24 year olds are out of a job: what else are they going to?), and furthermore, with debt being non-dischargable, this is about as safe a carry trade as any, even when faced with the prospect of bankruptcy. What JPM is implicitly saying, is that the party is over, and all private sector originators are hunkering down, in anticipation of the hammer falling. Or if they aren't, they should be.
JPM is not alone:
Minneapolis-based U.S. Bank sent a letter to participating colleges and universities saying that it would no longer be accepting student loan applications as of March 29, a spokesman told American Banker on Friday.
"We are in fact exiting the private student lending business," U.S. Bank spokesman Thomas Joyce said, adding that the bank's business was too small to be worthwhile.
"The reasoning is we're a very small player, less than 1.5% of market share," Joyce adds. "It's a very small business for the bank, and we've decided to make a strategic shift and move resources."
Which, however, is not to say that there will be no source of student loans. On Friday alone we found out that in February the US government added another $11 billion in student debt to the Federal tally, a run-rate which is now well over $10 billion a month an accelerating: a rate of change which is almost as great as the increase in Apple market cap. So who will be left picking up the pieces? Why the Consumer Financial Protection Bureau, funded by none other than Ben Bernanke, and headed by the same Richard Cordray that Obama shoved into his spot over Republican protests, when taking advantage of a recessed Congress.
"What we are likely to see over the next few months is a lot of private education lenders rethinking the product, particularly if it appears that the CFPB is going to become more activist," says Kevin Petrasic, a partner with law firm Paul Hastings.
"Historically there's been a patchwork of regulation towards private student lenders," he adds. "The CFPB allows for a more uniform and consistent approach and identification of the issues. It also provides a network, effectively a data-gathering base that is going to enable the agency to get all the stories that are out there."
The CFPB recently began accepting student loan complaints on its website.
"I think there's going to be a lot of emphasis and focus … in terms of what is deemed to be fair and what is over the line with collections and marketing," Petrasic says, warning that "the challenge for the CFPB in this area is going to be trying to figure out how to set consumer protection standards without essentially eviscerating availability of the product."
And with all private players stepping out very actively, it only leaves the government, with its extensive system of 'checks and balances', to hand out loans to America's ever more destitute students, with the reckless abandon of a Wells Fargo NINJA-specialized loan officer in 2005. What will be hilarious in 2014, when taxpayers are fuming at the latest multi-trillion bailout, now that we know that $270 billion in student loans are at least 30 days delinquent which can only have one very sad ending, is that the government will have no evil banker scapegoats to blame loose lending standards on. And why would they: after all it is this administration's sworn Keynesian duty to make every student a debt slave in perpetuity, but only after they buy a lifetime supply of iPads. Then again by 2014 we will have far greater problems (and for most in the administration, it will be "someone else's problem").
For now, our advice - just do what Jamie Dimon is doing: duck and hide for cover.
Oh, and if there is a cheap student loan synthetic short out there, which has the same upside potential as the ABX did in late 2006, please advise.
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Almost correct -- much of the additional financing dollars are going to administration and capital (land and building facilities.) Somewhere in the past year someone has published a chart with adminstration as a percent of univerity expenditures, and the growth rate is well beyond that of professor salaries. As usual, it's the top feeding the top.
I remember an article, last year, which stated that berkely, had as many teachers, and administrators, as students
Right on, completely correct, way out of proportion to any concievable "need" Upped you both.
http://www.nas.org/images/documents/A_Crisis_of_Competence.pdf
A Crisis of Competence: The Corrupting Effect of Political Activism in the University of California
The system needs those fat cat PhDs to promulgate the collectivist ethos. If the youthful students didn't learn collectivism in college they might become - gasp - Republican, or even - double gasp - libertarians with thoughts of a Ron Paul presidency. The system can't afford to not have these fat cat PhDs. The future of the ponzi scheme depends on them! Ergo, student loans forever, at least until there are no more student loans at all.
"Oh, and if there is a cheap student loan synthetic short out there, which has the same upside potential as the ABX did in late 2006, please advise."
puts on apol
Also as long as there are steeple to be brainwashed, the "high"-er education train will keep rolling
Apollo Group, and Washington Post Company (Kaplan) go down for the count.
Just because loans aren't dischargeable doesn't mean they'll actually be paid.
See that's the whole endgame. If people don't have an income, then they can't pay, period. They can't pay off student loans, they can't pay off the mortgage.
Same applies to municipalities, states, businesses.
The bankers never understand...they think they can extend debt to infinity and then live off the interest. But at some point it doesn't get paid back!
This either ends in a grand debt repudiation such as the world has never experienced before, or in hyperinflation. There's no other way out.
Exactly! You're the first person here to disagree with the myth that because repayment is legislated, it will happen. It won't! And another thing, why isn't the full cost of the education loan, not just the interest, tax deductible?
Another possibility is that they will collateralize the student loans, name it a "troubled asset", let the Fed monetize it, and hail the action as "the most significant investment that has ever been made in our country's future"
Let's give the politicians an education they deserve.
I'm sure there is a private techinical school ETf out there.
A collection of private universities like Phoenix who grew and survive on student loan money is an interesting short
BTW, you can't pop this bubble. Education will never lose value. A 4-year degree cost same amount 50-years ago as it does today.
Either you have mastered the art of sarcasm, or you have entered the pantheon of most complete idiots ever to sign up for a ZH account...
hey, dont junk me because you dont understand economics. how much do you think college tuition will be in 10-years panteon word using smartass. you know the college i graduated from 2-years ago hiked their tuition up by more than 200% and if you dont have a 4-year degree in honolulu, you have to either deal drugs if you are a male or turn to prostitution if you are a female because we have the second highest income tax, a very high cost of living, and salary that is lower than san francisco or new york.
LOL or alternatively you can develop a skill with actual market value and tell the paper pushers to go fark off.
They don't let you know about that option in school no matter how much they suckered your ass to sign on the line for, do they?
How do I break it to you gently? Let me give it a try.
YOU GOT FLEECED AS SURELY AS ANY SHEEP IN IRELAND
(did that wake you up? No? Let me try again)
FOUR YEARS AND SIX FIGURES LATER YOU STILL DON'T HAVE ANY MARKETABLE SKILLS
Are we smart yet?
what the hell are u talking about. im a veteran with experience in maitenance of highly technical aircraft and atteneded college with my GI bill but took out loans to party like a rock start with bad ass bitches and college sluts. now i have 2 college majors, techinical experience, and had opportunities to bang college and bad ass bitch girls. if you have been to honolulu you know the type of bitches im talking about, the type that playboy ranks #1 in the world. so come fix my plumbing after i take a shit and clog it.
LOL OK you got me
<3 dry sarcasm
or epic basement fantasy. . .
hay mr pantaloon word using samrtass what teh hell is u takling abuot. im a vetran what did maitencing of high technacil arecraft. and atteneeded collage with my GI bill but took out loanes to pardy like a rock. start with bad as biches adn collage sluts now i have to collage mayors techinacil expreinece and had oppartuneitys too bang collage. and bad ass bich girls if you have been too honaluaulu you know. the teyp of biches im taulking about the teyp that palyboy ranks $1 in the werld. so come fix my pluming aftar i take a shit. and clog it. loles
(you're really very good at this, she whispered with a grin)
Alternatively you could lower your cost of living by pushing all the demonrats into the breakers till you don't see them no more... That way you don't have to sell meth or ass to make ends meet.. You keep voting for the idiots that ruin your city, state ( see Detroit, NJ etal) and then wonder why you have to peddle your ass... Liberals...
fool, we had an republican governor 2002-2010. a white female republican governor.
http://en.wikipedia.org/wiki/Linda_Lingle
besides, ice (crystal meth) and prostitution will never dissapear when you can quadruple your money selling ice, and $200 minimum a john son
The country had one of those quaint what did you call her, a Republican AND A WHITE FEMALE AT THAT WOW..... Yeah his name was tree or shrub or something like that, nothing changed as the Congress was disfunctional and frankly so was he, bailed out some banks and stuff. Instead of thinking you should snort a bit of ice and sell your buttocks to the touristas, seriously your going to hurt yourself.
hey jagyourself, you smoke ice jackass. dumbass republicans. ask for the most federal money, are the most obese, employ the most immigrants and hate their women. no wonder they fall for mit romney's shit and bring up Reagon cause the last 2 presidents they elected twice from the same family were fuck ups
Yeah well, you haven't met all of us son... Some of us are not obese, have some interesting experience and will have a plan..
lol, you left off replying to part of his rant list,
your plan involve some profiting at the expense of?
*tease*
go ahead and junk yourself
You assume there was a rational alternative available at the time.
Fuck?
http://www.theblaze.com/stories/armed-neo-nazis-patrol-sanford-as-black-...
Armed Neo-Nazis Patrol Sanford As Black Panthers Hold ‘Survival’ Training Session
Are radical fringe movements being allowed to hijack the Trayvon Martin case?
With parallel local and federal investigations of the Florida teen’s shooting underway, radical, race-focused groups from both extremes are gathering in Sanford, Fla., bringing additional tension to an already strained situation.
The New Black Panther Party was in Sanford on Saturday to lead a “Self Defense and Survival Training.”
If we're lucky, the racist assholes on both sides will wipe themselves out.
Yeah but if they do that...
- It's gonna spread
- The government will move to ban guns
It's all fucking staged and the fools are gonna do it anyway...
Will this be how the final collapse/civil war/revolution begin?? Probably. The sheeple will kill each other while the banksters steal whatever left there is in the US while making money off an even bigger police state across America... the new economy?? Prisons, cops and TSA agents...
Americans and Europeans warmongers think that war is awesome and everything... they don't know what the fuck war is. Even if they have lost their kid/husband/friend.
In a REAL WAR... you see YOUR KIDS die... YOUR GRANDMOTHER die... YOUR MOTHER die... YOUR BROTHER die... you see everyone you know DIE...
If America had a civil war, maybe they would understand that war is the sickest thing there is and would stop invading all those countries.
Maybe a civil war could help restore America's values...
well, buying / owning a gun doesn't automatically make you informed/smart - it just makes you armed.
if you think that all this recent gun buying frenzy was about "patriots" that want to retake their government, then you've not been paying attention to the "average amrkn" (and by "you" I mean any one, not you specifically).
divide and rule, with a healthy dose of "I hate, I'm angry & I'm armed" - the populace will do the "rulers" work for them, all we need is some angry "unrest" this summer, and lock down will make "elections" a part of "history" - ^^
Sadly, all that hate makes em terrible marksmen and bystanders always catch a few rounds.
As illustrated earlier tonight, taxpayer funded Government Giveaways cannot sustain very long. Let’s listen to John (business in the front, party in the back) explain how the Government pays him to buy a special blend of gasoline.. And that’s NO BULL!!
Ethanol Benefits Start @ 20 seconds.
Now taking the above example, apply the same thought process to this article, I believe you can connect the dots regarding Education freebies.
what we also have is called modernized feudalism -- given that our country has created a superior class of citizen -- the banker class -- who was granted private ownership of our capital -- and the serfs (and government) pay tribute to the King Banker Class thru our debt-based currency. The obfuscation of this reality is as clever as it is wicked.
Don't forget the priests - the MSM, they are doing ok thankyou, and the Court - the politicians they are also doing ok, so are the Agents of Intrigue - the CIA etc.
Yes, this is fuedalism. I do wonder about this 2nd amendment that Americans keep talking about - I understand it is the right to bear arms - why isn't every pissed off peasant just carrying around an assault rifle on a daily basis? This is a serious question, I would be interested to know the answer.
Are there laws that say you can't carry around an assault rifle wherever you go? And if there are such laws, then what is the use of the 2nd amendment - does it simply mean 'You can carry guns when the govt tells you its ok to carry guns?'
if you're seriously advocating "pissed peasants" toting assault rifles wherever they go - then I suggest you spend the summer in one of the military strongholds - by the time you return, I'm sure you'll find what you're looking for. . .
Conscription (compulsory military service for debt forgiveness and employment and population reduction), bitchez.
The higher your debt, the sooner you're drafted.
banks are going to insist it go the other way around
We'll miss all those Ivy League kids. <sniff>
Ding Ding Ding
We have a winner.
(2) upon request by the Director of Selective Service, and in coordination with the Secretary of Defense, assist the Director of Selective Service in development of policies regulating the induction and deferment of persons for duty in the armed services;
I'm glad I didn't do any "higher" education out of high school, except in 1983, joining the US Navy the day after the Marine Barracks was truck bombed in Beirut and killed 241 American servicemen.
don't we make a million dollars more, on average? i still didn't get mine.
Tyler, the play I see is long personal defense, security, and vice, but short USD proximates (oil-correlates).
Unemployed ex-students will become increasingly disenfranchised. They are already the most anti-Fed, pro-RP element. They get the gig more than most on this forum give credit, even when they can't articulate exactly why. This burden of debt weighs on them daily. After all, they jumped through the hoops they were supposed to jump through. There was supposed to be a pot of money on the other side. Instead, they get unmitigated oppression--while the foreclosure generation skates. This palpable unfairness grows bitterness daily, fomenting toward rebellion and organized variants. My suggestions are naive: rather than the gun-makers, etc., I'd consider historic episodes of similar generational upheaval. The wake-up among entitlement inclined 20-30's will be energetic, per my intuition.
I don't see a way around this that doesn't involve a contraction in the US taxbase revenue. These kids have a mountain of debt, and the psychology is obvious. Either poverty, or whatever job I can get to help me pay rent and pay my credit card bill, while I pay the minimum on my student loan tab. This desperation allows cheap-ass labor for the service industry, further expanding the lower class. Lower class tends to continue vice purchases.
The main (obvious) play is short USD proximates. When the bubble pops, just as the housing bubble, holders of packaged student loans are going to sell that shit, and the guarantor is going to be increasingly forced to make these loans whole. Bond capos wills insist on a student loan Maiden Lane. USD collapse ad naseum. Pre-implosion, expect commodity and real asset input business models to be most damaged.
Sound about right?
Physical gold & silver...
As perverted as it is, QE of student loans makes a lot of central planning sense. Can fit nicely in an academic speech in reinforcing the "dual mandate" of lower unemployment by "lowering the cost of higher education".
You may have heard about ABS... it's time to meet SLABS:
http://www.economywatch.com/finance/high-finance/slabs-student-loan-asse...
There was actually talk back in 2008 that the Fed should take on SLABS as collateral because they were Triple A Safe Assets, no kidding!
http://www.reuters.com/article/2008/04/07/usa-fed-collateral-idUSN072870...
Someone ought to look into those "Triple A Rated SLABS"......
The wake-up among entitlement inclined 20-30's will be energetic, per my intuition.
_________________________________________________
Made me laugh. Quite a bold statement. Especially as people in their 20s 30s will remain in their 20s 30s for a decade or two. So quite easy to check the prediction viability.
Sure, sure. Their most energetic wake up will be to move in a foreign country where their starting capital that would have bought them nothing in a US citizen society, will buy them a cosy position.
New wave of colonization in progress by both the US citizen youth and pensioners.
Hmm, too bold? Spain might be an interesting foreshadowing. But one concern is that US 20-somethings (I meant 20 somethings, not 20-40) are much more complacent than their worldwide counterparts: Fat & entitled, content to live from one electronic textual burst of belonging to the next.
You make a fair challenge; furthermore, the cultural fractionation further immunizes the status quo from organized dissent. The case for foment is not so strong.
not so sure about your assessment of the under 30 club - there's a large contingent of dudes hitting the "third world" babe-search market, aka "those bitches just love amrkn dudes 'cause we gots teh monies, and their economies are CHEAP to live in!!!"
which is really just the upgrade to white boy colonisation that has always been, sans the guns - the guns usually come later, when the occupied nations get tired of emptying the boy's pockets, and move to kick their sponging, exploiting asses OUT.
No, the demand for money, credit or not, IS infinite. And it's not just one group of the population, it's everybody. From the wealthiest banker to the poorest slob, to the government. Money is special, the only thing that extinguishes all debt.
You can never have too much money.
The latest warmongering from DC :
http://www.haaretz.com/news/diplomacy-defense/u-s-to-demand-iran-immedia...
U.S. to demand Iran immediately close Fordo nuclear facility The New York Times reports that the Obama administration, European allies due to set demands for Iran nuclear talks, that include a halt in production of higher-level uranium enrichment."We have no idea how the Iranians will react," a senior Obama administration official told the newspaper. "We probably won't know after the first meeting."
ARE THEY FUCKING SERIOUS??? Bunch of fucking liars. They are creating a reason for war. No way in fucking hell Iran accepts that. No country would.
I want to know:
i. who gave this girl a student loan;
ii. how she got through high school;
iii. how she scored on her SAT/ACT;
iv. what type of major she has;
v. what her current grades in college are;
vi. why she has not been expelled;
http://www.youtube.com/watch?feature=player_embedded&v=D6LfTid4IMY
And you fucking ignornant TWITS wonder why the US society is in decline?
Who's the fucking ignorant twit here? Do you know anything about this woman or are you just making presumptions/assumptions? Maybe she had a mental break.
I don't give a shit if she had a mental break.
If a white guy got up in the middle of class and started yelling, nigger this, nigger that, and hitting black students in the face he would be expelled before he left the class room (and would probably be in jail for assault and charged with a hate crime)
She's not the caliber of individual that should be attending higher education. Sorry buddy, and if you think she is, that is the exact reason this country is going down the fucking tubes. I don't want money coming out my paycheck to pay for people like that to go to college, if you want to why don't you pay for it.
As if you wouldn't be paying for a private loan with your bank deposits instead.
What a rube.
Choice is a difficult concept for you Leftists isn't it. People may not do what you think they should do, that ends badly as you cannot make me do what you want me to do. The Leftists paradigm assumes everyone is as cowardly as them and will not resist having our choices made for us, at some point the last straw goes on and well lets just say you should have a plan other than uncle sugar..
Wonder about this Boise St. student?
http://youtu.be/oUFyVzaWT2o
The UK Government thought it would copy the US (as in so much the UK has no culture other than apeing the USA) and create a Student Loan Market for Securitisation - hence the trebling of Tuition Fees which has bloated the Treasury Spending since it has not yet managed to create a revenue stream to make it worthwhile securitising.
Anyway, is it possible that Securitisation is no longer possible on CDOs in that foreign buyers simply won't touch such paper regarding it as very high risk compared to rolling over T-Bills ? It would be interesting to know just which funds are holding Student Loans in their portfolios, for example University Endowments or Retail Bond Funds or whether any of those Student Loans are coupled with the same student's Mortgage Debt or whether correlation is totally unsystematic.
I don't see how this pops though.
Student loans are typically made up of two portions, a subsided portion (gov backed) and un-subsided portion (private-backed).
If private backing goes away, gov will just step-up to the plate and cover the whole thing. There is already legislation in place for this I believe, recently signed in 2009 by Obama. Private backers wil not lose money on bad loans, cause the Fed will just put the losses on their sheet like they did with the MBS. If I am not mistaken there loans are already securtizied making it easy for them to move around the financial system.
The government will defend this till the end, and this bubble will not pop until the entire system goes down I think.
The next logical step it seems to me, is that the government may come up with 'guidelines' as to what course of studies the loans may be used for. After all, majoring in fine arts is great and all but how many college-trained puppeteers and painters do we need when we currently have a glut? Limiting gender studies probably won't happen because of the potential backlash but perhaps library science will since fewer libraries are hiring.
When there is just one source for loans, you give power to that source as to where the money can be spent.
Man this is getting very interesting. I graduated with no loans . Worked till I was 30 and worked all the way thru college and happy that I never took out a loan. Most degrees Americans pursue are worthless degrees.
No ideas on how to short this? Best to start with who holds the highest level of student loans.. Shorting them if they meet qualifications would be good start
Just another worthless prediction, but I think a voluntary conscription is coming. Join the army, student loans forgiven. It will become a socially acceptable norm, part of the college/young adult experience.
I mean, it's either that, or the government actually manages to fix something.
Govt can't even organize an orgy in a whore house. Nuf said.
Uh,
Isn't it already an Orgy in a Whorehouse organized by the wealthiest constituents?
The problem is, so many young people even those with "higher degrees of learning" are still so useless, it's like chasing good money after bad. College kids who can't read, write etc. But my, are they proficient with their cell phones!
So who is "useful" in your ever so shrewd judgement?
Gubmint, by nature, fucks up what it touches. Residential mortgage market being prime case in point. College financing being the newest case - it is nothing more than a massive transfer of wealth from the young and gullible to academia and financiers. Gonna be a lot of grossly overpaid academic types taking big and well deserved pay cuts as the higher education ponzi is exposed and the bubble bursts.
Funny thing is, Obamacare's reported saving were from the creation of this CFPB for student loans. The obamacare number was net of this. And whatever they modeled the default rate.
No matter. They get theirs. And I mean no rational person should ever go into the debt to the government. They will garnish your wages, your tax returns, make you appear before court, question why you bought something or went on vacation (because they'll have access to all your financial records). And you know where it also leads: some people on the left are going to claim that because the collective paid for your education, you should be forced to "serve" the government to pay it back.
What's going to be funny is when universities start giving out honorary degrees to government officials as a thank you for approving more loans for them.
If you haven't figured this out by now this has become just another way to falsify how bad the economy is under the Obama administration. Those who can't find jobs either continue in school longer(advanced degrees) or go to college/vocational schools with the hope of finding a job later. Well later is fast approaching and nothing appears to have changed in the way of job creation. What a mess the next adminstration is going to find. Obama is an empty suit and no one can rightly defend is record of massive economic failure.
Long Credit Default Swaps on majors in Sociology and Afro-whatever Studies.
JUBILEE!!!
Three years overdue at the least.
Ron Paul 2012! End this shit.
Lawerence Goodman interview and op-ed on the bond market (worth listenting to)
(Tom Keene refers to America as a Banana Republic)
Bloomberg Interview
http://media.bloomberg.com/bb/avfile/vWHOffqSMdT8.mp3
WSJ op-ed
Demand for U.S. Debt Is Not Limitless
http://www.google.com/search?hl=en&q=lawerence+goodman+wall+street+journ...
"Back in 2006, contrary to conventional wisdom, many financial professionals were well aware of the subprime bubble, and that the trajectory of home prices was unsustainable."
So what will they be saying in 2016 about today?
One thing that is not discussed much is the high probability that over half the student loan debt is cosigned by mom and/or dad. Ultimately, these are the people whom Sallie Mae/ banks go after.
I don't believe that the private banks can garnish wages as easy as Fannie goverment direct loaners can. In additon, I don't thionk garnishments can exceed 10% of paycheck wages at a time.
People with slave loans, and no decent employment really need more information on how to defend themselves from Fannie Mae and the banks. It hasIbeen well established that the bubble will burst, but what is the best recourse for people trying to survive throiugh this disaster. This would make for a good follow-up article on the the whole theme.
It's called "administrative wage garnishment", require no court order, and takes 15% of your after-tax wages
Do you know if the "no court orders" applies to both goverment -Sallie loans, and private bank student loans.
I think it applies to any federally-guaranteed loan, regardless of who issued the student loan.
Also, the IRS "offsets" any refunds, and Treasury "offsets" up to 15% of any SS/SSI/SSD benefits as well.
Nasty nasty
http://www2.ed.gov/offices/OSFAP/DCS/awg.html
It's stunning that people could be so stupid as to essentially pay to get a job. Our society has completely forgotten why people work - it is to make their lives better by earning extra money to spend on things they want. But instead, people now seem to think that working is the point of life.
I recommend putting your families resources together and buying a little place in the country where you can grow your own food and provide a service to your neighbors to barter for some of their goods. That is, if your family has any resources left that they have not sold off in exchange for paper dollars that can only buy plastic junk.
Read:
http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref
Nice sentiment, but nowadays this sort of thinking is considered asocial and may mean that you are ... how did officialdom put it recently??? Self-radicalizing. Not to mention a tax evader. Clearly someone not to be tolerated.
You have but one purpose in life, and that is to work so that the state can benefit from its investment in you via its share of the fruits of your labor.
Does anyone know which banks have the biggest exposure to student loans?
BINGO! To the one who said school would be more affordable if the govt stopped giving out loans like candy.
And if prospective students had to pay from their own savings/earned income, they would also choose their majors carefully, and study harder.
Most loans these days are necessarily co-signed by parents; your ignorance runneth over.
My well meaning sister is now paying $700 a month and my niece only finished three years of university. She's a little worried since my niece is working as a prep cook at the local Mex chain. Sometimes I'm glad I never had kids.
Fewer loans will lower tuition costs.
Lower costs will lead to INCREASED attendance.
Students and universities will be better off.
[Getting students to spend more time studying and less time drinking may be a separate issue.]
More graduates, more educated people. Education is the answer, not a crucial element in the current situation.Non technological societies have pushed the world where it is now. US citizen societies have preserved the world.
Etc...
What is going to happen is known: a new wave of colonization. As they are too much US citizens in the US citizen nations, that too much of people is going to be poured over the rest of the world to dilute the issue.
Just good old US citizen way of tackling problems.
AnAnonymous said:
Sure, sure. More Chinese citizenism kicking can running dog ignoration.
Of course, dilution of responsibility to the exterior is to be expected when Chinese citizenism citizens are busy buying up land and homes in the west coast US of A and British Columbia Canadia for family members to occupy.
The pan-continental blobbing up of Chinese citizenism is a critical component of the eternal nature of Chinese citizenism.
Made me laugh. Good old Chinese citizenism way of tackling problems is going downthere to opium parlor wifi hotspot and taking in much of opium smoking intoxication.
Mmmmm, breathe in the sweet smoke of Chinese citizenism opium parlorism. Let your brain burn bright with Chinese citizenism denialism and running dog ignoration.
Smoke up to the stars and beyond!
Your Chinese citizenism propaganda burning brainism is more transparent than the clouds of opium smoke which surround you in the wifi hotspot.
The volume of your opium smoke confusionated brain US citizenism ranting indicates that your neighborhood PLOP (Peoples Liberation Opium Parlor) makes opium discounting for Chinese citizenism citizen customers in exchange for wifi hotspot utilization to make many fevered rantings about US citizenism.
Going to be some sort of parties downthere, with you as most favored customer...
Back in 2006, contrary to conventional wisdom, many financial professionals were well aware of the subprime bubble, and that the trajectory of home prices was unsustainable. However, because there was no way to know just when it would pop, few if any dared to bet against the herd (those who did, and did so early despite all odds, made greater than 100-1 returns).
_______________________________________________
A telling admission.
But it is not by conventional wisdom. Just mere US citizen propaganda.
A few additions here: US citizenism has killed debate. Now when facing a piece of information, it is all about weighing in whether the admission or the denial of the piece of information is the most profitable.
Yes, many US citizens denied that the bubble would pop but to be full on the topic, one must also factor in the profits US citizens raked in by denying the bubble. So yes, 100 to 1 but how much for the denialists over the course of time?
Another point is that US citizens have built a world of quasi certainty.
It is no longer a matter of determining what would occur if but a matter of figuring out what will happen when.
Indeed, a game changer. As when is often a triggering priviledge.
Insider information is vital in that sort of configuration as there is little to figure out but the date of the event.
Over a period of a week, a human being will pass water. It is not if. Taking a bet on if means nothing. It is a matter of when. And knowing the person who is the gambling event really helps as that person can tip on when.
A dimension that is offuscated by US citizens who have built a whole industry on risk assessments around the question what if.
That question seldom is. Most of the times, it is what when. Insider information before everything as models built to answer the wrong question likely answer wrongly to the right question.
Tiresome
Sooooo....what's a government going to do? How about making the student loan dead beats an offer they can't refuse. Such as come work for Uncle at $10 per hour, living in a barracks, nice snazzy uniform, doing "god's work".
$300 billion at $10/hr would net 30 billion hours of "service to the country".
Soooo...a country full of government-owned debt slaves?
Do they have to say 'yes, massa?'
Will some of the slaves be more equal than others?
Question: Will children born in your government slave camps be free, or new slaves? I know that could be asked about all children born in the US, but that's a different level of slavery.
Wait! I know! You could have them compete for food on tv...that'll please the masses. Or did I see that in a movie?
Soooo...a country full of government-owned debt slaves? Will some of the slaves be more equal than others?
Different than we have now?
Seems we aren't too far away from this.
Scary thought huh? Not out of the question though. Reverse GI bill.
Does the "nice snazzy uniform" include a brown shirt?
We cannot continue to rely only on our military in order to achieve the national security objectives that we've set. We've got to have a civilian national security force that's just as powerful, just as strong, just as well-funded.
Barack Obama
Club, pepper spray and if they really like you several hundred rounds of .40 HST...
OT: Ontario Teacher's Penions Plan funding gap of $9b. Interesting read, considering the ages of the retirees.
http://business.financialpost.com/2012/04/03/ontario-teachers-pension-plan-faces-funding-gap-despite-record-assets-of-117-billion/
Among the funding issues facing the Teachers’ plan is that many of its pensioners have been retired for longer than they worked.
What the article does not state is that many of those "teachers" retired at age 50 and if you read the details of their plan not only do the taxpayers pay their salaries and therefore pension contributions but the government (taxpayer) matches those contributions. And in the end the taxpayers will make up any shortfall. Like with so many American public service unions, the Ontario Teachers held the taxpayers hostage such that average wages for teachers in Ontario >$85k (not bad for a 6 hour day and three months off with 20 sick days/yr that can be accrued)
http://news.nationalpost.com/2012/03/02/ontario-eyes-two-year-teacher-sa...
http://www.otffeo.on.ca/english/pensions/facts.pdf
And in the USSA Teachers get rewared for crappy work. Let parents pay for this crap and lets see how this will workout.
Let's say penions plans no longer invest in treasuries, but instead sell their assets to make up for shortfalls in the medium term.
"William King, then J.P. Morgan's chief of securitized products, was vacationing in Rwanda."
Who the hell vacations in Rwanda? Was he on a black rhino or elephant hunting safari?
"...was vacationing in Rwanda"
Was Disney World all booked up?
They let you hunt negroes at Disney World?
Worse.
After waiting an hour and a half in a endless line for a two minute ride - most people just loose the will to live.
Better that than bladder control.
Scrutiny shrivels shylock shtick.
still true.
One of my good friends, paying off a degree from Strayer, as she works as a short order cook, writes to me about her "Mam"..
Student Loans- Slavery
Homeonwnership- Slavery
CC Debt- Salvery
IPHONES/IPADS/SamrtPhones- Slavery
Workingfor Corp Amerika- Slavery
Now did they really abolish slavery?
Prostituiton market gonna be crowded as this unravels. College Girls and Single Moms gonna compete in the same space. Too much supply, less demand and the price will be right.
Don't worry, im sure the big banks already have another scam concocted to make them untold profits and fuck everyone over. Only problem is just about everyone has already been bent over. Now what? Crash the currency, come up with a new one, outlaw gold and start all over? They probably already have the new printers built lol.
http://capital3x.com/trades/worst-payroll-since-oct-2011/
NON FARM PAYROLL ANALYSIS
The purpose of the student loan program is to enable students to go to college to learn the stuff they didn't learn in the government run High Schools. It all makes sense.
The average person has more knowledge at their fingertips than a prIvy League president just 40 years ago.
This easy credit for "higher education" is merely another bailout mechanism to support a bloated obsolete government sponsored institution.
School is obsolete. That's the core problem.
Agreed, however unless u are going to school to get an Engineering or Someform of Scineces degree it is worthless. I wonder the Spring Breka Pictures will mean anyhting anymore other than on FB showing how they partied while earning or sleeping to get their General Ed Degree which cost them 50K plus from a State School. O Momy, Daddy help me, WTF.
School is a socialization mechanism, it teaches people the proper roles and attributes of the caste they were born into.
Where we're at now is those roles being upended by a technological revolution.. and the people in power being unhappy about potentially losing their primacy.
I have run into quite a few "students" of higher education in the last couple of years that are planning to just stop paying- and in short order. They are racking up the bills and have no intention of ever paying it back. They say, and I quote, "It should be free anyway! I'm just using the system to get my degree and I fully plan on never paying."
Um, sweethart, if you ever plan on working above the table JPM.gov will extract their due. Getting a degree from a college does not prepare you for what it takes to work in the realm of the black market... but I'm sure that tat just above your ass crack and the 13th hole in your face filled with steel will forever allow you to not clam the tips from buzzing my scalp or bringing me a makers & ginger ale.
This just out: scientific study shows conservative thinkers are lazy, stupid, drunken louts!
http://phys.org/news/2012-04-effort-opinions.html
What really ticks me off is that I'm not lazy.
I know not the methods to capitalize on such a bubble, but I rest assured that there is near certaintly of this imploding in the next year and half. Having friends in what I would call "the student loan industry", (working for small private colleges in the recruitment department - which is less about recruiting and more about finding ways get prospective students enough money to buy a degree), it is clear that a students ability to pay back loans of any size is not taken into account when they are lent the funds. Their in debt parents cosign on the loan, but nobody can really pay for it. What's really going to send this wild is the quantity of students with low paying jobs that owe significant ammounts of money and can be convinced to find ways to default by deteriorating economic conditions and other students defaulting.
"But the important thing to remember, is these people who bitch here are complaing about people who are actually intelligent enough to work the system.
Not one of the idiot fucks you see bitching and moaning really cares about bettering the world, about actually raising standards, all they care about is personal greed."
Called in an artillery strike on your own position. Kaboom! Direct hit!
There's more..but why bother.
I don't think there is much wrong with higher education. The three issues are secondary education, credit availability, and what society values.
Secondary education forces rote memorization based on testing rather than problem solving and analysis. The issue here is that once they get to higher education they don't question authority or the knowledge brokers. They are formed to be complacent and dictated to. If we taught better problem solving skills, better research/analysis skills, and created a generation of skeptics, higher education would lose its poltical bite. It's impact would be deadened. There are many longitudinal studies about higher education and how students react to authority. The numbers suggest--and the outcome is fairly obvious/intuitive--that the move away from analytical skills to rote memorization has increased subservience to conventional knowledge.
Secondly, higher education cost is pegged to credit availability. These instututions will spend every dollar they can, with new porgrams, new buildings, new student housing, etc. They will increase cost directly based on how much kids will pay which is a direct function of credit. If the flood gates were never opened to credit the prices would have changed relatively little. What is sad, though, is that without it, many smart kids that could be something good and contribute to society would be held back because of lack of funds. But there are other ways to solve this problem.
Also, no one seems to understand that what these kids choose as a career is a function of society and what society values, not just some random dumb decision. The focus on the arts is a function of conspicuous consumption, IMO, which pushes kids into fields that are not practical. The idea that someone can study philosophy is really based on the idea that they need not earn, or have enough money such that it doesn't matter. And the boomers seemed to have revelled in this fact, bragging that their kid is an english lit major.
While many here deride higher education, I am thankful to have had mine. The program was good and I would probably earn a quarter per year in salary otherwise. But I did study hard science.
More predatory lending bullcrap. If you have a four-year degree, in computer science, and at the end of four years of job search you don't have a job IN COMPUTER SCIENCE, then Dick Durbin's bill allows you to include student loans in bankruptcy.
True, in the past there have been medical students who ran up student loan debt, declared bankruptcy, and went on to make millions. So prosecute medical doctors. Don't collect from Social Security and don't punish an entire middle class for the greed and corruption of medical doctors. Remember, we had a chance for a limited prosecution scenario and we fumbled it.
...or the govt could just figure out additional ways to "forgive" the loans. I think that's the best case scenario here for the borrowers.
I thought they had already started bundling these loans and sold them to dumb Euro bankers.
WHEEEEEEEE!
You can default on the surgeon who saved your life...
But Professeurs Krugman, Sommers, Roehmer et al cannot be dafaulted upon.
Beauty.
Central and South America. The debt slaves will flee there to look for gold. Look for abortion to be banned as the US starts looking more and more like Detroit.
Wages and Salaries are falling like a knife, when there is employment to be had that is. And, while student loans [also enter food and energy here] continue their exponential path it will put a damper on any ideas of growth in the economy in the future.
With that said, you can expect "Student loan forgiveness" to be a phrase we will hear much about in the coming years, I'm sure. So, if you don't have a degree now - get one, and if you already have one, get another, because you will be paying for it one way or another.
Of course, there are other possible options, for instance, we could skip the iKidney route the Chinese boy took and just have students sell thier kidney to the local university?
As an aside, I am with Tyler, if anyone has an idea on how to effectively short SLABS [student loan asset backed securities] let me know too please.
gs_
Student loans... the one place to get unlimited cash. Unsecured!! And best of all, you don't have to pay it back... its on your kids. I know of no better cash grab ever.
Only one material source for student loans? The Fed essentially price fixing tuition? That doesn't sound dangerous at all.
It's out of control because it's owned by the Sabbattean ( cult of the all-seeing-eye) Jew Rockefellers, whose name was Ruggenfeld in the Germany where they migrated from. And just look here to see what their financial house, JPMorgue, is doing now - in cooperation with Marc Rich, the Israeli operative pardoned by Clinton, and Bruno Iksil:
http://www.myspace.com/tom_heneghan_intel/blog
Better buy bullets before the Ruggenfelds have DHS buy them all to keep them from you, because the best thing that you can hope for is the demise of this family.