SEEDS OF SUPER CRASH II – THE STUDENT LOAN SUPER BUBBLE
The US Government under President Obama has cut back federal funding support for higher education to its lowest level in decades to try and get funds for Obama care with think. The cost of higher education is out of any control worse than health care. The cost is paid from ASTRONOMICAL DEBT that can not ever be repaid.
Have we simply swapped the economic speculations of the housing market and credit card rally debt for the unsustainable roulette of STUDENT LOANS? Let’s look how unstable this economic system is.
First how large is student loan and debt in the USA? Well over 44 million of American’s are truly struggling to pay their student loans off. A rising delinquency rate is approaching 40%.
The total is 1.7 TRILLION DOLLARS OF STUDENT LOANS – most of the spiraling soaring up BUBBLE is never going to be repaid – and the rippled effects moves good assets of balance sheets to bad assets. Yet the musical chairs for this broken economic model is ongoing, being copied globally and spiralling out of control in nations everywhere.
1.7 Trillion DOLLARS folks is is MORE than total car loans on automobiles and more than all credit card debt for comparison purposes how bad this spiral is becoming.
Since 2008 we have swapped the HOUSING DEBT BUBBLE ( that is still with us by the way for found two as the speculators changed nothing as they are exempt from new laws ) into a STUDENT LOAN SUPER BUBBLE. Rising a nuke into the higher clouds of economic no man’s land.
STUDENT LOANS ARE A WEAPON OF MASS DESTRUCTION TO THE ENTIRE WORLD ORDER TODAY IF LEFT UNADDRESSED.
Right, this minute 8 million of the 44 million holding student debt at NOT DELIQUINT that is 40% plus – but eight million are in PURE DEFAULT. That default level remains higher than the PRE CRISES LEVELS which leaves a bad symptom for the adjustment this all breeds as the SUPER BUBBLE works its way through the economic lower bowel as it must.
It is going to become a gigantic fart with all the politicians wringing their hands doing the blame dance saying WOE IS ME WOE IS ME HOW COULD THIS HAVE HAPPENED as they transfer real blame to anyone but themselves. This is a leadership in crises of integrity or a leadership of pure shame to the American People and the people of the world.
Why? Because socialism and competitive capitalism are both fully FAILED MODELS operating on greed machinery with systems that consolidate wealth until 1% own more wealth and control more wealth than 99%. Then a nation IS bought and paid for to perpetuate inwardly its own systems forever versus self correct and reform systems to higher excellence at first option to do so. A new model we call COOPERATIVE CAPITALISM outlined in Redemption the COOPERATION REVOLUTION publication at Amazon defines HOW to move from the failed models to the new global cultural higher performance model for COOPERATIVE CAPITALISM. Student loan abuse is another credit abuse one of many that doom the present financial order to SUPER CRASH global depression and world war.
Soaring out of control college education costs do not shrink this number they explode this debt total which is unfolding now.
The headline consumer price index is only 2.7% but the soaring cost of higher education between only 2015 and 2016 rose over 9%. Almost 15% at IVY league colleges.
More and more higher education have DOUBLED DOWN with billions in DICEY BOND deals to construct facilities and grow administrators who are bought and paid to bring in wealth donors, and investors into these bond deals rising a spiral of COST that is out of any control and mindless.
The average DEBT LOAD for higher education the AVERAGE AMERICAN now carries is 70% greater over just one decade ago when Obama came into office than it is today. You can not blame these trends and numbers on Trump which is economic news, not politics.
The average per year sticker fee at baseline for IVY LEAGUE brand name higher education on average annually is $ 72,000 to $ 140,000 PER YEAR.
STUDENT LOANS IS A MASSIVE HEADWIND TO CONSUMER SPENDING – HOME AND DURABLE GOOD BUYING AND THE DEFAULT TREND SPELLS BIG ECONOMIC SEEDS OF A SUPER CRASH IN WORLD MARKETS AT 1.7 TRILLION WITH SO MUCH IN DEFAULT AND ALMOST HALF DELIQUIENT AND LATE LATE LATE.
Social fabric tears are showing in marital problems, depression, and crime from the high debt on 44 million. But there is WORSE. Wait for it.
OF THE MASSIVE SPIRAL UP IN OUT OF CONTROL STUDENT LOAN DEBT THE DEBT CRISES IS COMPOUNDED AS A PURE WEAPON OF MASS ECONOMIC DESTRUCTION WHEN THE READER UNDERSTANDS TAHT THE LARGEST CHUNK OF THOSE HOLDING THIS DEBT DO NOT END UP WITH FINAL DEGREES. THIS SILENT MAJORITY HAS HAD TO DROP OUT FROM THE STRESS LOADS OF JOBS, STUDY, AND PRESSURES TO PAY THEIR DEBT BURDENS CURRENT TO CONTINUE YEAR TO YEAR PILING UP THE DEBT SADDLES. THIS CREATES A “THEY” WILL NEVER GET THE DEGREE TO ADVANCE INCOME TO REPAY THE DEBT INSTITUTIONALIZING A DEBT CYCLE DRIVEN DOWNWARD MOBILITY FOR THE MOST VULNERABLE OF THE AMERICA POPULATION.
HOW DID WE GET THERE?
Obama needed money for Obama care so higher education got a whack.
The Conservative Koch Billionarie teams has been waging state by state WARS on pulic University funding – where states today provide only $ 2000 of public funding for higher education or the lowest investment in education in over 30 YEARS or three decades. THAT IS HOW WE GOT HERE – EXTREME POLITICS. Rather than economics leading policy politics have led policy and the UNINTENDED CONSEQUENCES ARE HORRIFIC to the core system. The Debt Saddle is to heavy for the horse to carry and it calls off sideways in the marketplace. DUCK WHEN THAT OCCURS.
The SUBPRIME crises took away parents ability to use their home equity like a credit card yet another source of money dried up to move to STUDENT DEBT BUBBLING.
As unemployment rate for the young both in America and worldwide is soaring to unseen numbers historically the only way up and out for a young person is higher education with accepting a near lifetime of student debt BURDEN. The BURDEN HAS SHIFTED TO THE INDIVIDUAL WHO HAS NO WAY TO PAY OFF THAT DEBT for the reasons set forth.
The things that make a person middle class:
- Health Care
- Pension and retirement
Off to the individual and away from any budget or social investment in the unborn generations. We saddle our unborn with impossible debt. As BILL CLINTON SAID years ago – folks it’s simple really its all just arithmetic – do the arithmetic.
The not for profit sector receives federal subsidies but uses very small % of the money for education with the MASSIVE BULK of money nearly 50% in 2017 – consumed by marketing to NEW STUDENTS going into DEBT with points and profits and debt sold shared by the institution. IS THIS A BAD SYSTEM OR WHAT?
The student loan market is the most nontransparent secretive and opaque market space on earth at 1.7 Trillion they have become too big to even jail.
Only 10% of FIRST YEAR STUDENTS could even predict their own debt load at anywhere near the correct actual cost to pay off the debt. They are blind.
Let me point out the crtiical change when politics drivess economics versus economics drving politics. In only 2007 most student loans were orginated by the private sector banks and financial institutiosn. Today in 2017 90% of all new STUDENT LOANS orgigonate with the DEPARTMENT OF EDUCATION. Anyone spot the problem or am I the only one?
The TRUMP ADMINISTRATION will not be able to hide disguise or fail to address the STUDENT LOAN 1.7 SUPER BUBBLE that added to other unpaid US obligations make the USA bankrupt if something is not done. We have proposed that solution in our book REDEMPTION THE COOPERATION REVOLUTION which works actually – and as far as this economist investment banker can see….it is the only solution.
On my colleagues working at the US STATE DEPARTMENT noting their proposed almost 30% cut back in operational budget, suggested – why is the Administration not hiring you as an adviser to their teams. I stated – hey they have not asked for any help. But I told em to hold on at the US STATE DEPARTMENT as the Congress of the United States is not about to whack our diplomatic troops down 30% to fund war games.
So the DEBT WARS ARE BREWING. In the end, war is simply a distraction from the national interest to rebalance trade accounts, which is achieved by redistribution through SYSTEM REFORM via cooperation or world war via competition.
The world is largely insane and is preparing for WAR in the aftermath of the crash – moving from trust and cooperation collaborations – into distrust and negotiation where every nation is in IT FOR THEMSELVES – the wrong-minded approach.
So – now you see the ALARM BELL is ringing and as the famous book suggests…ask NOT for whom the bell tolls…..for this bell tolls for THEE.
Berny Dohrmann – Wringing the ECONOMIC ALARM BELL across the world to my tribe
PS: Only economists at the tippy top try to record the total BAD Debt in the system – our best numbers today are about 100 Trillion in Asia and another 100 Trillion for the rest of US. 200 Trillion – shown as assets which are really just crap. Think about how that works out in the end.— April 14, 2017