Crushing student debt is not only killing dreams, it’s hurting the broader economy.
The Consumer Financial Protection Bureau (CFPB) is warning of the “potential domino effects” to the economy of high student debt. A just-released report from the consumer watchdog highlights the ways this debt can deplete savings, limit spending, and shape choices about a graduate’s career path and where to live.
“College can open up many opportunities, and we do not [...]
April 14, 2013
Even as the economy struggles to recover from the bursting of the sub-prime mortgage debt bubble in 2008 a new debt crisis over student loans looms on the horizon, and this time the federal government is actually profiting off of debtors. If a coming interest rate increase is not averted by Congress, millions of student borrowers could be thrown into default, with devastating consequences not only for themselves [...]
The day of reckoning for global total debt – total credit market debt up from $28 trillion in 2001 to $53 trillion in 2012. US consumer debt went up in last few months but largely because of giant amounts of student loan debt taken on.
You have to really question what passes for financial analysis these days. One financial show was discussing the recent increase in consumer debt as something positive. [...]
The release of the Federal Reserve’s report on consumer credit was very telling. One of the continued themes that the economy was on its way to a real recovery was that the consumer was well into deleveraging the household balance sheet. This is important because one of the drags on economic growth has been a low savings rate due to high debt service levels. The chart below shows “real,” inflation adjusted, consumer debt relative [...]
Despite a whittling away of consumer debt that has been underway since therecession, many Americans are still entering the holiday season unprepared to cope with the expenses that crop up around this time of year.
Think Finance, a provider of payday loans and other financial services for consumers with limited or no access to banking services, recently surveyed 1,000 Americans across all income levels who use various forms of alternative financial services — [...]
Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November as they await a full report on the country’s compliance with the terms of its bailout, a European Union official said.
Finance chiefs won’t make the call to release 31.5 billion euros ($40.1 billion) of aid for Greece that has been frozen since June when they meet in Brussels on Nov. 12, the official said [...]
From Sober Look:
Deutsche Bank’s latest research on U.S. consumer leverage suggests that the deleveraging process may have another couple years to run. They determined the long-term trend line based on consumer debt to GDP ratio from 1953 to 2003, thus excluding the bubble years. Then they compared the current leverage to this line and looked at the rate of convergence. The intersection with the trend line is expected to take [...]
By now, the bubble in student loans is becoming more widely understood. The absolute level continues to rise significantly and growth is accelerating with 8% YoY growth just reported, via the WSJ. Of course the reasons are anathema but attending college on the back of hope of a better-paying job when everyone else is also attending college in that hope (thanks to endless student-loan funding from your helpful government) seems to be self-defeating as the [...]
NEW YORK (CNNMoney) — Student loans have more than tripled over the past decade, according to new data from the Federal Reserve.
Student loan debt hit $904 billion in the first quarter of 2012, up from $241 billion a decade ago, according to the Federal Reserve Bank of New York quarterly household debt report. That’s up 275% since the same period in 2003.
Students continued heaping on debt throughout the economic downturn, [...]
Consumer spending does remain strong. 0.8% growth in February was the best number in 7 months.
Retail sales and consumer confidence have also been strong.
But the numbers can’t last. Personal income growth as just 0.2% in February.
Thanks to college tuition and the car market, consumer debt is growing again.
The housing market is still miserable.
State and local spending is still depressed.
There’s still plenty of excess capacity, restraining business investment.
It call [...]
From The Reformed Broker:
A few years back, the asset management industry began to get really interested in broadening out their emerging markets (or BRIC) exposure on the equity side with emerging markets debt. They did so primarily with emerging markets sovereign debt – bonds from the countries themselves. And it was good.
Obviously, because of currency issues in 2011, the locally-denominated stuff (like $ELD, also from WisdomTree) did not do as [...]
by John Aziz of Azizonomics blog,
This chart tells millions of stories. I’m trying to get my head around its implications.
That’s right: since 1984 (surely an appropriate year) while the elderly have grown their wealth in nominal terms, the young are much worse off both in inflation-adjusted terms, as well as nominal terms (pretty hard to believe given that the money supply has expanded eightfoldin the intervening years). So why are the elderly doing over fifty times [...]
Wolf Richter www.testosteronepit.com
Another student protest, another mass arrest. Monday, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds of students then flooded the Rotunda of the Capitol, a somewhat raucous affair. Eventually, the California Highway Patrol cleared them out, and 60 were carted off and thrown in the hoosegow for trespassing and resisting arrest.
Their problem: tuition increases. Already, tuition in California’s state schools has tripled over [...]
More American households are falling back into the debt hole, this time without the safety net of home values to help bail them out, the New York Post reported Sunday.”People made some progress in reducing card debt earlier in the year, but in the last few months, as the stock market started to rise, they started to return to their old ways of charging things,” he explained.Last year, total US [...]
by Lance Roberts of StreetTalk Advisors
The Straw That Potentially Breaks The Camels Back
Back in December I penned an article about the potential for gasoline prices to rise quickly to catch up with surging oil prices. We said then “If we look at just the nominal price data going back to 1990 we can see that there is indeed a very high correlation between oil prices and gasoline prices. While divergences from each other [...]
You have to really question what passes for financial analysis these days. One financial show was discussing the recent increase in consumer debt as something positive. In the same breath this person also said thathouseholds increased savings. Now think about this statement. If you financed a $2,000 vacation on your credit card but increased savings by $500 did your balance sheet improve? Of course not. Let us not even dive into [...]
Our national situation is what’s alarming, and housing is only a small part of it. Only a few points above 60% of Americans are saddled with a mortgage. That means a shade less than 40% aren’t. But ALL are citizens of a very financially-strapped land. Our national debt loads (deficits, entitlements, infrastructure decay), coupled with unwillingness to cut spending dramatically, are far, far more important.
We have been on a slow [...]
by Donna Freedman
I got a big income tax refund last year.
Well, I would have, if I hadn’t applied it toward the quarterly taxes I pay as a freelancer.
What are you going to do with your refund, if any?
My MSN Money colleague Liz Pulliam Weston suggests spending 10 percent of any windfall on something non-essential.
But don’t let the rest of the money trickle away.
I’m not going to address the idea that tax refunds are of the devil, i.e., [...]
Debt Slavery: 30 Facts About Debt In America That Will Blow Your Mind
When most people think about America’s debt problem, they think of the debt of the federal government. But that is only part of the story. The sad truth is that debt slavery has become a way of life for tens of millions of American families. Over the past several decades, most Americans have willingly allowed themselves to become [...]
As comparisons between US and European debt to GDP levels and the finger-pointing of who is deleveraging more continues, McKinsey notes (in their quarterly Debt and Deleveraging article) that there may be a light at the end of the tunnel for the US as private-sector deleveraging has been rapid since 2008. However, reading on a little, we find that the light at the end of the tunnel may well be the front [...]
by Business Insider
Weak data on November retail sales and an earnings miss from Best Buy on Tuesday poured ice-cold water on the whole “strong holiday shopping season” meme.
All the upbeat commentary about Black Friday, Cyber Monday and the like was always specious, according to Howard Davidowitz, CEO of Davidowitz and Associates. Like Barry Ritholtz, Davidowitz says Black Friday data, particularly, can’t be trusted and is annually hyped by the retail industry to encourage consumers to [...]
China is not going to play it…when the consumers who use their current income which is previously created debt or an asset which is inflated in value by previously created debt as collateral backing their request for commercial banks to create new debt…reach a point where they can’t continue doing that.
the income the chinese depend upon to sustain their double digit exponential growth stops.
and they collapse.
so they will be forced [...]
The sharp rise in federal borrowing is overwhelming efforts of consumers to reduce debt, leaving the economy deeper in debt than when the recession began in December 2007, a USA TODAY analysis finds.
The substitution of government debt for consumer debt helped end the recession and start a recovery, economists say, but it leaves the nation’s long-term economic health in peril.
Households have reduced debt by $549 billion since 2007, mostly by [...]
A key reason why a preponderance of the population is fascinated with the student loan market is that as USA Today reported in a landmark piece last year, it is now bigger than ever the credit card market. And as the monthly consumer debt update from the Fed reminds us, the primary source of funding is none other than the US government. To many, this market has become the biggest credit bubble [...]
Promoting Economic Growth
An open-ended stimulus should be promoted, says Stephen Roach, Morgan Stanley Asia Non-executive chairman.
American consumers have too much debt, not enough savings and are afraid they will lose their jobs—if they haven’t lost them already.
It might be time for something that hasn’t been done since the 1930s to get Americans spending again: national debt forgiveness, Stephen Roach told CNBC Monday.
A stronger dollar [...]
By: Nelson D. Schwartz
The New York Times
It feels eerily familiar: Stocks are plummeting. The economy is slowing. Politicians are scrambling to find solutions but are mired in disagreement.
Many Americans are wondering whether they are in for a repeat of the financial crisis of 2008.
The answer is a matter of fierce debate among economists and market experts. Many say the risks are lower today—at least in terms [...]
Shipments of electronics goods account for almost half of the total exports from the Philippines
Philippines exports fell for the first time in 20 months as shipments of electronic goods, the country’s biggest export, plunged in May.
Exports of electronic goods slumped by 26% in May, compared with the same month last year according to the latest data of the census department.
The country’s overall exports dipped by 3.2% [...]
Those looking for inflation and high interest rates can find them in much beloved emerging markets, especially Brazil.
Reader Otavio, from Brazil writes …
Otavio here, a Brazilian follower of your blog. Today I want to express my satisfaction as I read you latest post entitled Preposterous Statements – Jim Rogers: “No Food at Any Price”; Barton Biggs: ” U.S. Needs Massive Infrastructure Program”.
When I hear statements like these, it [...]
by Jim Quinn of The Burning Platform
It’s The Debt, Dummy
I think charts tell a story that allows you to disregard the lies being spewed by those in power. Below are four charts that tell the truth about our current predicament. The first is from http://www.mybudget360.com/. The austerity and debt reduction storyline being sold by the MSM is a crock. The total amount of mortgage debt outstanding [...]
Back in November, we posted a piece by Knight Research titled “The Game Is Over” in which the firm’s strategist Mark Lapolla presented his thesis why he believes that “the structural and cyclical terms of global trade have finally reached their tipping point. This will catalyze a wholesale change in sentiment and a historic repositioning of risk assets. The emerging market global growth story [...]
by Charles Hugh Smith from Of Two Minds
Our “Let’s Pretend” Economy
There are two economies–the real one, which is in decline, and the “let’s pretend” one touted by the State and corporate propaganda machines.
Children love to play “let’s pretend.” Let’s pretend the economy is “recovering.” Why does this “recovery” remind me of an addict who’s conning his caseworker? (Yes, I’m really in recovery–those aren’t tracks, they’re [...]
“Using data from the Federal Reserve, CardHub found that consumer credit card debt had increased by $6.5 billion in the third quarter of 2010, a figure that seemingly contradicts other studies that say credit card debt is actually starting to decline.
This contradiction stems from the fact that most credit card debt studies fail to account for charge-offs, which occur when creditors consider the debt uncollectable, [...]