Student Loans

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RBS Pays $600 Million for Manpulating Interest Rates … But Big Banks Are Manipulating EVERY Market to the Tune of Trillions of Dollars

The economist Herbert Stein once said that if something can't go on forever, it will stop. The pattern of the last few decades, in which higher education costs grew much faster than incomes, with the difference made up by borrowing, can't go on forever... There is no point in trying to preserve the old regime as "working your way through college" is now impossible. For an 18-year-old, investing such a six-figure sum in an education without a payoff makes no more sense than buying a Ferrari on credit.

Moments ago, GM, now fully non-government backstopped (and perhaps because of), reported adjusted US vehicle sales of 230,157, a decline of 6.3% from the 245,733 cars delivered a year earlier, on expectations of a 1.5% increase in sales. As Kurt McNeil, VP of US sales, announced "“December started a little slow but sales were stronger later in the month, especially in the week between Christmas and New Year’s. We didn’t make any big changes to our ‘go-to-market’ strategy during the month, which is to offer competitive incentives and market aggressively, and we are carrying good momentum heading into January." GM also was quick to put blame on wintry weather in December - fear not though, they won't be the last. It was unclear just how substantial GM's incentives were in a month in which below margin inventory liquidation was the name of the game for all retailers: we expect to learn soon. But perhaps the most interest datapoint in today's release, and one which may explain why GM's sales missed, was that the car's near record channel stuffing, which as we reported last month had soared in the past three months at a record pace, and was just shy of its all time high, saw a modest decline from 780K to 748K. Still, the latter number was still the highest ever December GM dealer inventory for the month of December in the restructured company's history.

The following 8 key dynamics (from government over-reach and economic stagnation to civil discontent and beyond) will play out over the next two to three years...

As usual, in 2013, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people.

"There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

Propaganda, phony fixes and more debt can only cover the widening gap between fiscal reality and official fantasy for so long. So what else besides the potential for another global financial meltdown bears watching in 2014? Here are a few worthy prospects... as we doubt the same illusions and tricks will get the global economy through 2014-2015 unscathed.

Obamacare's rollout may be in limbo even though the official deadline has come and gone (despite a much touted 2 million visitors to healthcare.gov on Monday which probably means it should IPO immediately), but the real sticker shock of actual fees awaits. And even as most insurers are opting to keep the full impact of the higher cost hidden, instead adding them to the overhead premiums charged, one company, Blue Cross Blue Shield of Alabama, has itemized the impact of the Unaffordable Care Act by adding a separate line itme for the "Affordable Care Act Fees and Taxes." Here is how these add up according to a breakdown conducted by the Post.

"At the end of that live-long day the American people are left in a matrix of lies so thick and sticky that all the de-greasing agents supposedly vested in freedom of the press will not avail to liberate them, and they are suspended like little morsels of winged prey to be sucked dry by the descending spiders of crony capital."

There are those who would blame the people who have chosen to live far beyond their means. They have a point. The financialization of America; where Wall Street con artists,shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped. But it is clear to me who the real culprits in our long downward spiral have been. Lord Acton stated the obvious, many years ago:

 “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”

? John Emerich Edward Dalberg-Acton

During 2013, America continued to steadily march down a self-destructive path toward oblivion.  As a society, our debt levels are completely and totally out of control.  Our financial system has been transformed into the largest casino on the entire planet and our big banks are behaving even more recklessly than they did just before the last financial crisis.  We continue to see thousands of businesses and millions of jobs get shipped out of the United States, and the middle class is being absolutely eviscerated.  Due to the lack of decent jobs, poverty is absolutely exploding.  Government dependence is at an all-time high and crime is rising.  Evidence of social and moral decay is seemingly everywhere, and our government appears to be going insane.  If we are going to have any hope of solving these problems, the American people need to take a long, hard look in the mirror and finally admit how bad things have actually become.

Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry. Yet we accept the officially sanctioned narratives as authentic and meaningful. Why? Perhaps the truth is simply too painful to accept, so we will reject it until we have no other alternative.

... the average person in the generation that turned 65 this year received $327 thousand dollars more in lifetime government benefits than they paid in Federal taxes. On the other hand, children born in the future (e.g., yours) will have a lifetime deficit on this basis of -$421 thousand dollars. If it sounds unfair, it is.

Productivity. Every employer loves it, and every employee is fascinated by it, especially if it comes in cute colors, a retina screen, and weighs under a pound... at least until such time as "productivity" results in the loss of the employee's job, which in turn makes the employer love it even more as it results in even higher profits, even if it means one more pink slip and a 91 million people outside the labor force. With a labor force already in turmoil as millions drop out every year never to be heard from again, made obscolete by the latest technological and computerized innovation, and students stuck in college where they pile up record amounts of student loans (at last check well over $1 trillion) hoping form some job, any job, upon graduation, unfortunately the future is not bright at all. In a recently published paper, "The Future of Employment: How Susceptible are Jobs to Computerisation," Oxford researchers Frey and Osborne, look at the probability of computerization by occuption. What they find is shocking for nearly half of the US labor force.

Inflating serial asset bubbles is no substitute for rising real incomes. Why are we stuck with an economy that only generates serial credit/asset bubbles that crash with catastrophic consequences? The answer is actually fairly straightforward.

Today's consumer credit report did not tell us anything we didn't already know: in October, total consumer credit rose by $18.2 billion, the most since May 2013, with the usual massive historical revisions. However, of this $18.2 billion, $13.9 billion was non-revolving credit, while revolving (credit card) debt rose by $4.3 billion. Which means revolving credit is still a woefully low $856.8 billion, or well below the $1.02 trillion when Lehman failed, even as credit issued mostly by Uncle Sam to fund car purchases and liberal educations, has exploded. Finally, and most troubling, in the past year over 95% of all consumer credit has been used to purchase rapidly amortizing cars and even more rapidly amortizing college educations.