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Guest Post: Our "Let's Pretend" Economy: Let's Pretend Student Loans Are About Education

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Submitted by Charles Hugh Smith from Of Two Minds

Our "Let's Pretend" Economy: Let's Pretend Student Loans Are About Education

Let's pretend student loans aren't just a stupendous and highly profitable scam being run on the youth of America. Of course pretending doesn't make it so.

We have a "let's pretend" economy: let's pretend the unemployment rate actually reflects the number of people with full-time jobs and the number of people seeking jobs, let's pretend the Federal government borrowing 10% of the GDP every year is sustainable without any consequences, let's pretend the stock market actually reflects the economy rather than Federal Reserve monetary intervention, and so on.

We also have a "let's pretend" education/student-loan game running: let's pretend college is "worth" the investment, and let's pretend student loans are about education. There are three dirty little secrets buried under the education/student-loan complex's high-gloss sheen:

1. Student loans have little to do with education and everything to do with creating a new profit center for subprime-type lenders guaranteed by the Savior State.

2. A college diploma's value in the real world of getting a job and earning a good salary in a post-financialization economy has been grossly oversold.

3. Many people are taking out student loans just to live; the loans are essentially a form of "State funding" a.k.a. welfare that must be paid back.

We've got a lot of charts that reflect reality rather than hype, so let's get started. Despite all the bleating rationalizations issued by the Education Complex, higher education costs have outstripped the rest of the economy's cost structure. Funny how nobody ever asks if there is any real competitive pressure in the Education Complex; there isn't, and why should there be when students can borrow $30,000 a year?

 

 

Student loans are skyrocketing--yes, America, we have a growth industry and it's called debt-serfdom. Debt serfdom is most effective when it starts young, so graduating with $100K in student loans and a couple thousand in high-interest credit card debt is the perfect start:

 

 

This is a chart from Zero Hedge drawn from a Federal Reserve spreadsheet: Name The Bubble. Of related interest: Student Loan Bubble To Exceed $1 Trillion: "It's Going To Create A Generation Of Wage Slavery" And Another Taxpayer Bailout.

 

 

Though we pretend a college degree promises a middle-class income, the reality is somewhat less rosy: earnings are flat to stagnant. Since about 30% of the workforce has a college degree now, the "edge" provided by a diploma has dulled considerably. It's supply and demand: the supply of those with college degrees exceeds the demand.

 

 

Student loans enable young people to "stay in school" or "go back to school". Waiting for the economy to pick up may or may not be a good strategy, but piling up debt to do so is a horrendously bad strategy--yet it is the one we enable and encourage.

 

 

Here's a snapshot of the employment picture. The bogus "unemployment" rate can drop to zero but that won't mean more jobs are being created.

 

 

The "engine of growth," small business, is in a tailspin. Gee, could it have anything to do with the supremacy of crony-cartel capitalism, over-regulation imposed by the Central State and local government, and skyrocketing healthcare costs?
 

 

 

Here's the reality. Large global firms, i.e. corporations, have been the major source of job creation in recent years. But due to a number of thorny issues such as skyrocketing costs of sickcare insurance in the U.S. and the need to develop resources within overseas markets, global companies are hiring overseas, not in the U.S., except for those with high-level experience in specific computer-software skillsets.

Even having a computer science degree isn't enough any more; employers want years of experience with a suite of software tools and they would rather poach an experienced coder from a competitor than go through the trouble of training a FOOS (fresh out of school) CS major.

The truly pathetic part of the student loan scam is that is often the only State funding available to marginalized populations. Here is an on-the-ground report from Dr. M.H., who serves the woefully under-served segment of the populace with severe mental health and poverty issues:

An amazingly large portion of my patients ( drug and alcohol addicted and the psychiatrically ill) are fleeing into student loans and grants to escape homelessness.

 

I even have previously middle-class patients ( many with previously missed "soft" bipolar illness which has got them into deep trouble due to depression and impulsiveness), some in their sixties, who are taking this route for want of any plausible alternative.

Student loans are a $1 trillion "business." Here is a "clock" of student debt.

$1 trillion is equivalent to the external (national) debt of Canada. (List of countries by external debt.) So let's pretend that loading up our students and future taxpayers with a debt load equivalent to that of an entire nation is an excellent strategy for furthering future growth and education.

What that $1 trillion does further is profits and debt serfdom. Here are a few other resources to review:

The $1 trillion student loan market begins to implode Department of Education shows two-year default rates at for-profit colleges up to 15 percent. Student loan debt increasing at a rate of $170,000 per minute.

Grading Student Loans (Federal Reserve Bank of New York)

35 Shocking Facts That Prove That College Education Has Become A Giant Money Making Scam

 


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Wed, 03/07/2012 - 15:08 | Link to Comment Hugo Chavez
Hugo Chavez's picture

Doctors do apprenticeships.

It is the most important part of our training.

Wed, 03/07/2012 - 15:10 | Link to Comment Hugo Chavez
Hugo Chavez's picture

Why have apprenticeships when a university can turn it into a four year degree and then "certify" the person. More money for the university that way.

Wed, 03/07/2012 - 16:53 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

I think you mean, "more money for the credential mill that way."

 

Wed, 03/07/2012 - 15:42 | Link to Comment Gyro Gearloose
Gyro Gearloose's picture

You make a good point.

It's a little ironic that a very high percentage of college grads end up in fields other than than what they studied for.

Also, regardless of one's training or experiance there is almost always on the job training which is quite sufficient for the the dutys performed in most cases.

I have had over 12 occupations in my life and in the majority of them I only had the opportunity to prove myself because of knowing someone on the inside.

Wed, 03/07/2012 - 16:52 | Link to Comment HungrySeagull
HungrySeagull's picture

Job training does a little, but actual EXPERIENCE is priceless.

Edited. No one cares about life lessons.

Wed, 03/07/2012 - 17:51 | Link to Comment Gyro Gearloose
Gyro Gearloose's picture

That is very true and any competent employer will pick up on that in short order.

Wed, 03/07/2012 - 16:48 | Link to Comment HungrySeagull
HungrySeagull's picture

I JUST hinted at it. Apprenticeship is good for you.

That was one of the few things that got this nation going, other than 9 year old children darting between the textile machines.

Wed, 03/07/2012 - 15:07 | Link to Comment Hugo Chavez
Hugo Chavez's picture

The little land grant college in my town became a university and now has branches everywhere. A community college nearby became a university.

Masters in education
Masters in social work
Masters in marriage counseling
Masters in recreation therapy.
Womens studies
Etc.

Grading standards dropped because if somebody dropped out they would lose revenue.

When someone with an 18 or 19 ACT can get a masters degree then college is a joke.

This has been the greatest misallocation of resources since the great pyramids.

Wed, 03/07/2012 - 15:11 | Link to Comment diogeneslaertius
diogeneslaertius's picture

it aint fraud when the #NWO does it

says so right here

itanimulli.org

Wed, 03/07/2012 - 15:54 | Link to Comment diogeneslaertius
Wed, 03/07/2012 - 15:23 | Link to Comment headless blogger
headless blogger's picture

There are some of these people, many middle age, that don't know what else to do. We know someone caught in a catch 22 of Student loans. They don't know what to do, said they've tried everything, even minimum wage jobs but can't get one of those either. They don't want to be left out on the street. They know it's bad.

The government, instead of helping the citizens, is setting them up for wage slavery. They are helping their donors over the general population.

It is pure B.S. that the economy is improving like they say. I know where we live it's bad and we know people who ARE NOT LAZY, but cannot find work, mostly middle age or the 18-22 age brackets. They are scared. So they see a program at a school they think they might be able to use to improve their situation. If you have a degree from the past you are more limited and so they get into these Grad programs.

If all this stopped tomorrow we would have a massive exodus of people from homes to the streets (which will happen anyways). It's easy to bash these people when you have a job and you are more "successful" than others.

 

Wed, 03/07/2012 - 16:53 | Link to Comment HungrySeagull
HungrySeagull's picture

We have what we call Perma-students. They stay in college 10-20 years slowly taking the classes as they go along.

The debts they rack up is not due unless they drop out, quit, or graduate.

Wed, 03/07/2012 - 15:27 | Link to Comment sgt_doom
sgt_doom's picture

Well, Prof. Michael Hudson's being saying this for about 40 years now, so I guess listening to him would be mighty preferable to listening to the Douchey Team of Bil Krystol, Richard Perle, Karl Rove, and the rest of America's most douchey draft-dodgers!

And for the latest real news:

LulzSec Takedown, The Real Deal

Sometime during the year, 2003, data mining achieved critical mass status, all that was required to pull up background information on anyone was their age and zip code.  Alternatively, the target’s name and telephone number would also suffice.

Combining the N.O.R.A. algorithm (Non-Obvious Relationship Awareness) with ClearForest text analytics software yields increasingly superior results.  ClearForest’s development was financed by an Israeli private equity firm, Walden, also responsible for Narus, with a sizable chunk of money coming from the DoD, and flowing through Walden.  This software can be found at US intelligence agencies, NASDAQ, and a variety of banks and financial services firms.

The recently reported FBI bus of LulzSec had really nothing to do with the FBI, but was the result of these super-sized databases compiled to track everyone; at the consumer level, at the social media level, at the medical/insurance level, at the education level, etc., with that particular NYC arrest of Sabu deriving from triangulating such seemingly disparate data sources, then running Wi-fi direction finding teams in the predicted geotagged location --- this is what occurred, please ignore all cover stories to the contrary.

Prior to World War II, the government of the Netherlands created a national citizen registry (name, birth date, religion, address, etc.) for positive public welfare purposes, but then the Nazis invaded and acquired access to this registry, and subsequently 75% of the Dutch Jewish population died.  (My people, the Roma or Gypsy population, was completely annihilated, with but a few escaping, my ancestor among them.)

Compare with Belgium and France, where 40% and 25% of the Jewish populations were murdered, respectively.  A portion of that 25% in France was tracked back to bank records, kept by the Rockefeller bank, Chase, which remained opened after the Nazi invasion as they had replaced the French bank manager with a Swiss neutral, who then handed over the accounts to the Nazis.

Absolute control, whether pursued by the Third Reich, or the present day Financial-Intelligence-Complex which effectively rules America and controls the media and manages public information content, offshores jobs, technology and investments (which once would have gone to local jobs’ creation and innovation), will only destroy progress and freedom and liberty.

And from the link below, via Chris Soghian,

http://paranoia.dubfire.net/2011/12/commerce-dept-export-licenses-for.html

Earlier this year, the Commerce Department's Bureau of Industry and Security held a two-day Conference on Export Controls and Policy. It included a workshop specifically focused on the rules governing the export of encryption technologies (which include intercept equipment). The full transcript can be found here: part 1 (pdf), part 2 (pdf). [See below links]

As a non-lawyer, and non-expert in export control regulations, I was pretty surprised to learn that the government already strictly regulates the export of covert communications surveillance technology. What this means, of course, is that the Commerce Department already has a list of every foreign buyer of US made covert surveillance technology. Unfortunately, they won't provide this information to the public, and as far as I know, they won't provide it in response to FOIA requests.

 

http://htc-01.media.globix.net/COMP008760MOD1/BIS_Web/Transcripts/072111_Encryption_Workshop_2011_part1.pdf

http://htc-01.media.globix.net/COMP008760MOD1/BIS_Web/Transcripts/072111_Encryption_Workshop_2011_part2.pdf

 

Wed, 03/07/2012 - 17:44 | Link to Comment Burticus
Burticus's picture

Two of the industries whose costs have escalated astronomically are sick care and edjumucation.  Coincidentally, both are gubmint Ponzis, built on Medicare/caid and stupent loans.

Act surprised.

Wed, 03/07/2012 - 18:16 | Link to Comment Miffed Microbio...
Miffed Microbiologist's picture

Besides the astronomical college education costs, what also is shocking to me is the barrier to entry. In 1985 I graduated as a microbiologist, was accepted into a clinical internship program ( 5 locations at that time) where they paid me a $300 stipend for 9 months. Now there is only one location to get the required internship and YOU pay $24,000 for a program that lasts for over a year! If you don't pass your clinical exams for licenture I guess you're SOL. So there is a shortage of clinical microbiologists and it's more expensive to become one....oh what the hell, I guess adding another $24,000 to the $100,000 in student college loans is no big deal.

Miffed:-)

Wed, 03/07/2012 - 18:38 | Link to Comment blunderdog
blunderdog's picture

I understand your view, but you have to admit, being a microbiologist today is a WORLD APART from being a microbiologist in 1985.

There wasn't much chance that a microbiologist in 1985 could learn skills which would permit him to engineer and construct lethal viruses. 

Not that this in itself justifies the change in the clinical internship you described--just important to remember the contextual shift over the past 27 years.

Wed, 03/07/2012 - 22:11 | Link to Comment Miffed Microbio...
Miffed Microbiologist's picture

Completely agree with what you are trying to say but,actually, clinical (hospital based) micro is pretty much the same as in 1985. In fact we still employ microbial culture techniques with some formulations that were used by "founding father" microbiologists (Erlich,Koch, Pasteur) in the late 1800s! Yes, I do use molecular techniques now that were only theoretical in 1985 but they are extremely costly and used only when an answer is needed fast. For example I can extract DNA from a Staph to determine if it's a MRSA in 2 hrs but it costs $100. I can do the same thing by growing the bacteria in culture but it will take 3 days and cost about $10. What you describe is primarily done by private biotech companies that have millions in venture capital to buy high tech sequencers... quite cost prohibitive for most hospitals. This is why I'm bothered by the cost new students have to incur, when I'm teaching them things that haven't changed that much.thanks for the comment though.

Miffed:-)

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