"In his book The Price of Civilization, Jeffrey Sachs argues that the cost of making all public higher education free in America would be between 15-30 billion dollars. While this may sound like a large sum, it could actually save money."
"First of all, the government is currently spending billions of dollars on for-profit schools and other colleges and universities that have very low graduation rates. In fact, what is going on in the state of California is that as students get priced out of the University of California, they either drop out or go to community colleges. Meanwhile as community colleges are defunded, they are forced to cut their enrollments and raise their fees, and the result is that students end up going to high-cost for-profit schools that have a very low graduate rate. In other words, in the current system, everyone pays more, and we produce fewer graduates."
"Currently, only 30% of Americans who start college or university end up graduating, and this represents a huge waste of time and money. If students did not have to work while in school, the graduation rate would improve drastically, and students at universities could graduate in four years instead of six or more years. In fact, the biggest reason why students drop out of higher education is that they cannot afford the high cost of tuition."
"Not only is higher education seen as a key to economic advancement, but if all 18-24 year olds were in college, we would reduce the unemployment rate by 2 million people, and fewer people would be in need of governmental assistance. Moreover, a federal program to fund higher education would relieve states of having to fund these institutions, which would free up money for other needed services."
"While the US has a free K-12 public education, its failure to fund higher education means that America's economy is unable to compete with other developed nations that have free universities."
"Furthermore, by removing the need for students to go into debt, the government would allow graduates to be more productive, and they would have more money to spend, which in turn would act as a stimulus for the economy."
"Of course, there are reasons beyond economics to provide free higher education. Not only do we need a more educated workforce, but we also need more educated citizens. It is also important to point out that people with higher education degrees report a higher level of health and happiness. In fact, societies with a high rate of degree attainment have lower crime rates and higher rates of social welfare."
"While few people would now reject the idea of compulsory K-12 education, it is now time to make college universal and free."
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Is the Real Unemployment Rate 22.6%?
"Jobless claims are down and hiring is up by recent measures, but some economists say the American unemployment picture is far bleaker than those numbers indicate. "
"As reported Friday, U.S. unemployment rate fell to its lowest level in 32 months in November with unemployment hitting 8.6%, falling below 9% for the first time in six months, the Labor Department said."
"But if all discouraged workers are included, the 8.6% figure rises. Including “marginally attached workers” – those who are discouraged – was 15.6% in November, according to government data. John Williams, a statistician and economist, says the real unemployment figure including all discouraged workers who stopped looking for work is closer to a staggering 22.6% — nearly a quarter of the potential workforce. Since 1994, the government data defines discouraged workers as those who have been looking for work within the last year."
"The supply/demand rate stands at 3.53, indicating there were 3.5 unemployed people for every online job opening in October. Nationally, there are 10 million more unemployed than there are advertised openings, according to the Conference Board."
"As reported Friday, U.S. unemployment rate fell to its lowest level in 32 months in November with unemployment hitting 8.6%, falling below 9% for the first time in six months, the Labor Department said."
"But if all discouraged workers are included, the 8.6% figure rises. Including “marginally attached workers” – those who are discouraged – was 15.6% in November, according to government data. John Williams, a statistician and economist, says the real unemployment figure including all discouraged workers who stopped looking for work is closer to a staggering 22.6% — nearly a quarter of the potential workforce. Since 1994, the government data defines discouraged workers as those who have been looking for work within the last year."
"The supply/demand rate stands at 3.53, indicating there were 3.5 unemployed people for every online job opening in October. Nationally, there are 10 million more unemployed than there are advertised openings, according to the Conference Board."
Who's Most Likely To Be In Debt In 2012?
"There can be little doubt that the U.S. is hovering on the edge of a recession as we head into 2012. This is forcing many social demographics to grapple with significant levels of debt, but who is most likely to suffer financial hardship as we head into a brand new year?"
"Household debt burdens have continued to fall through the last financial quarter. That said, there remains a significant level of household debt within the U.S., and this situation is unlikely to improve with unemployment expected to remain high throughout 2012."
"The issue facing families and homeowners in the U.S. is one of multiple debts and the prospect of having to prioritize what gets paid as a matter of urgency. When you consider that the average debt per household in the U.S. (not including mortgage repayments) stands at approximately $14,500, then you begin to understand the amount of repayments that may be missed in order to maintain a family home."
"It is all too easy to forget about student debt as the year draws to a close, but the fact remains that this is potentially even more of a threat to the U.S. economy in 2012. Mortgages can be sourced with an interest rate of as little as 5% in some instances. However, student loans are often available at rates of anywhere between 6.8% and 7.9%. This makes them considerably more expensive in comparison, especially given the fact that they do not secure a tangible assets or boast a specific value."
"This is not to say that education is not valuable. It is just that it does not offer the same level of financial security that a house or an automobile does. Student loans can live with graduates for an entire lifetime, and certainly hinder them as they enter an economy where unemployment is high and job creation is low. With student loans set to top the $1,000 billion mark for 2011, it is clear that an increasing number of students are attending college and therefore taking on an enormous amount of debt and financial liability. Considering the rising cost of loans bills and exaggerated rates of repayment, 2012 could be a worrying year for graduates and college students."
"An increasing number of U.S. citizens aged 60 and over are approaching retirement age heavily burdened by debt. Mortgages remain the most significant problem for this demographic. Thirty-nine percent of home-owners aged between 60 and 64 held primary mortgages in 2010, with a further 20% owning secondary mortgages. These figures had nearly doubled those recorded in 1994, revealing that an increasing number of citizens were still burdened with significant repayments well into their twilight years. This problem has only been exacerbated by the steep drop in housing value, which has left many with negative equity and facing difficult times ahead in 2012 and beyond."
"Household debt burdens have continued to fall through the last financial quarter. That said, there remains a significant level of household debt within the U.S., and this situation is unlikely to improve with unemployment expected to remain high throughout 2012."
"The issue facing families and homeowners in the U.S. is one of multiple debts and the prospect of having to prioritize what gets paid as a matter of urgency. When you consider that the average debt per household in the U.S. (not including mortgage repayments) stands at approximately $14,500, then you begin to understand the amount of repayments that may be missed in order to maintain a family home."
"It is all too easy to forget about student debt as the year draws to a close, but the fact remains that this is potentially even more of a threat to the U.S. economy in 2012. Mortgages can be sourced with an interest rate of as little as 5% in some instances. However, student loans are often available at rates of anywhere between 6.8% and 7.9%. This makes them considerably more expensive in comparison, especially given the fact that they do not secure a tangible assets or boast a specific value."
"This is not to say that education is not valuable. It is just that it does not offer the same level of financial security that a house or an automobile does. Student loans can live with graduates for an entire lifetime, and certainly hinder them as they enter an economy where unemployment is high and job creation is low. With student loans set to top the $1,000 billion mark for 2011, it is clear that an increasing number of students are attending college and therefore taking on an enormous amount of debt and financial liability. Considering the rising cost of loans bills and exaggerated rates of repayment, 2012 could be a worrying year for graduates and college students."
"An increasing number of U.S. citizens aged 60 and over are approaching retirement age heavily burdened by debt. Mortgages remain the most significant problem for this demographic. Thirty-nine percent of home-owners aged between 60 and 64 held primary mortgages in 2010, with a further 20% owning secondary mortgages. These figures had nearly doubled those recorded in 1994, revealing that an increasing number of citizens were still burdened with significant repayments well into their twilight years. This problem has only been exacerbated by the steep drop in housing value, which has left many with negative equity and facing difficult times ahead in 2012 and beyond."
Richard Wolff on the Euro Crisis with Thom Hartmann
"Professor Richard Wolff, New School University NYC joins Thom Hartmann. The Eurozone is creeping closer and closer to spiraling into an economic abyss. And the biggest economy in Europe has reservations about riding in on a white horse to save the day."
Surging student loan debt threatens homeownership
"Student loans are going to be yet another hurdle for the housing market to overcome," Palacios said. "Faced with mounting student loan debt, poor job prospects and stagnant wages, an increasing number of people aged 25 to 34 have moved back in with their parents." According to John Burns, almost 6 million 25- to 34-year-olds now live with mom and dad. This number is up 26% from 2007."
"The current rate of homeownership rate for this demographic stands at a 10-year low for under 30s. The rate for 30- to 34-year-olds is even worse, at its lowest rate in 17 years. "The debt load is so high, and the job outlook so bleak, that student loan default rates have almost doubled," he wrote in a note to clients. "With the economy little improved since 2009 default rates are bound to rise further.""
"This number is greater than all credit card debt outstanding, and second only to mortgages in terms of total national debt."
"The current rate of homeownership rate for this demographic stands at a 10-year low for under 30s. The rate for 30- to 34-year-olds is even worse, at its lowest rate in 17 years. "The debt load is so high, and the job outlook so bleak, that student loan default rates have almost doubled," he wrote in a note to clients. "With the economy little improved since 2009 default rates are bound to rise further.""
"This number is greater than all credit card debt outstanding, and second only to mortgages in terms of total national debt."
White Americans Now Have 20 Times the Wealth of Black Americans
"The median wealth of white households in America is now 20 times that of black households and 18 times the wealth of Latino households, according to a new study from the Pew Research Center. And in case you're thinking that means whites have $1 million while blacks only have $50,000, think again: The typical net worth of a white household is $113,000 while the typical net worth for a black household is a paltry $5,600, not even the cost of a new car."
"This is the biggest wealth gulf between the three groups since the government started collecting the data 25 years ago. It's also two times the size the divide was for the 20 years that led up to the latest economic downturn. Why? Because when the housing market bubble burst, minorities, who had been preyed upon by unethical lenders, were disproportionately affected. From 2005 to 2009, inflation-adjusted median wealth for blacks and Latinos cratered 53 percent and 66 percent, respectively. Among whites, that drop was only 16 percent."
"This is the biggest wealth gulf between the three groups since the government started collecting the data 25 years ago. It's also two times the size the divide was for the 20 years that led up to the latest economic downturn. Why? Because when the housing market bubble burst, minorities, who had been preyed upon by unethical lenders, were disproportionately affected. From 2005 to 2009, inflation-adjusted median wealth for blacks and Latinos cratered 53 percent and 66 percent, respectively. Among whites, that drop was only 16 percent."
Steve Keen on BBC: "We're already in a Great Depression"
"Sarah Montague talks to Steve Keen, one of the few economists to have predicted the global financial crisis, about the possibility of another Great Depression, and how to avoid it."
"'Another Great Depression is all but inevitable' - that's the view of Steve Keen. He's been called the 'Merchant of Gloom', but he's one of the few economists to have predicted the global financial crisis. While he used to be a lone voice in challenging the economic consensus, more and more people are now listening to him. His way of avoiding depression? Write off the debt, bankrupt the banks, nationalise the financial system, and start all over again."
Student lending, Wall Street's next bubble, will disproportionately affect black people
"... the sheer number of students with outstanding loans has credit-rating firm Moody's Analytics worried. As of March 30, outstanding student loans totaled about $805 billion, according to the U.S. Department of Education, which administers the loans. Rising tuition costs, a soft job market and troublingly low graduation rates at many schools cast doubt on whether a growing number of people will be able to pay those loans back."
"In a July report, Moody's opined that students' inability to pay back their loans could cause the next economic crisis in the U.S. According to the Education Department, default rates are on the rise nationwide, standing at 7 percent as of September 2010 (the latest figure available), up from 6.7 percent the year before. Moody's expressed special concern about students at for-profit proprietary schools, which include many trade and online universities, and where graduation rates are typically lower than those of traditional colleges and the loan-default rate is higher. Minorities make up a majority -- about 54 percent -- of students enrolled at these schools..."
"For proprietary schools, the student-loan default rate as of September 2010 was 11.6 percent, up from 11 percent the year before. Low graduation rates, high tuition costs and training in fields that are in lower demand are among the reasons people attending these schools can't meet their obligations, according to Moody's. With unemployment at a staggering rate of 15.9 percent for African Americans (the national unemployment rate hovers at around 9 percent), the bursting of a bubble in student lending could be especially hard on the black community."
"A 2010 study by the College Board Advocacy & Policy Center (pdf) found that student-loan debt levels of $30,500 or higher were more common among black bachelor's degree recipients (27 percent) than among their white (16 percent), Latino (14 percent) or Asian (9 percent) counterparts. Plus, "More black students have student loans and have higher unemployment rates, so the debt level is more consequential," said political economist Dr. Jessica Gordon Nembhard in an email. Nembhard is an associate professor of community justice and social economic development in the department of African-American studies at John Jay College in New York City. "With the increase in the economic downturn, black unemployment levels will stay high or get worse."
"In a July report, Moody's opined that students' inability to pay back their loans could cause the next economic crisis in the U.S. According to the Education Department, default rates are on the rise nationwide, standing at 7 percent as of September 2010 (the latest figure available), up from 6.7 percent the year before. Moody's expressed special concern about students at for-profit proprietary schools, which include many trade and online universities, and where graduation rates are typically lower than those of traditional colleges and the loan-default rate is higher. Minorities make up a majority -- about 54 percent -- of students enrolled at these schools..."
"For proprietary schools, the student-loan default rate as of September 2010 was 11.6 percent, up from 11 percent the year before. Low graduation rates, high tuition costs and training in fields that are in lower demand are among the reasons people attending these schools can't meet their obligations, according to Moody's. With unemployment at a staggering rate of 15.9 percent for African Americans (the national unemployment rate hovers at around 9 percent), the bursting of a bubble in student lending could be especially hard on the black community."
"A 2010 study by the College Board Advocacy & Policy Center (pdf) found that student-loan debt levels of $30,500 or higher were more common among black bachelor's degree recipients (27 percent) than among their white (16 percent), Latino (14 percent) or Asian (9 percent) counterparts. Plus, "More black students have student loans and have higher unemployment rates, so the debt level is more consequential," said political economist Dr. Jessica Gordon Nembhard in an email. Nembhard is an associate professor of community justice and social economic development in the department of African-American studies at John Jay College in New York City. "With the increase in the economic downturn, black unemployment levels will stay high or get worse."
The UK and the neoliberal transformation of higher education by James Vernon
"Why has the idea of publicly funded higher education crumbled so quickly in England? James Vernon explores the origins of an academic culture that has internalised market rationalities and traces the concept of education as a personal investment back to the playing fields of Eton."
"Never before has the idea of the university been so feverishly debated in England, and for good reason. The restructuring of the country's higher education sector around a student-debt-financed, fee-driven model is a fundamental recasting of the university's place and purpose in society. But this process did not begin with the government's higher education White Paper or even with the Browne Report that laid the ground for it. And neither is it confined to the UK."
"The neoliberal transformation of higher education is a global phenomenon. In the Americas, Europe, Russia and its former colonies, the Middle East, Africa, South Asia and Australasia, higher education is being rebranded as a private investment and the university repurposed to generate profit and economic growth. As a consequence, academics and students are confronting very similar conditions across the world: the escalation of fees and student debt, the expansion of management and administrative systems for measuring the efficiency of services, the quest for a plethora of new types of fee-paying consumers, and the casualisation of academic labour."
"Is it any wonder then that, despite the continuing protests, the majority of students and their teachers are resigned to the privatisation of higher education in England? Many, it seems, have accepted the logic that the public funding for higher education was only possible when the system educated only a privileged elite. It is as if the public value of higher education somehow mysteriously evaporates when it is more democratically available."
"Preventing the headlong rush to a new idea of the consumer-orientated and profit-centred university requires more than outrage, protest or even the publication of alternative White Papers, necessary as all of them are. We must first try to understand how we arrived at the point where a redirection of public funds to support sub-prime loans for student-debt-financing of higher education seemed natural and inevitable. It is no longer sufficient to nostalgically invoke a better idea of the university, of a golden age of public funding, without understanding how it became so vulnerable to a critique that has eventually eviscerated it."
"While the words "access" and "fairness" are abused by ministers, these terms speak to a continuing belief among the electorate that universities are powerful engines of social mobility. It is this idea we must appeal to if publicly funded university education, which enriches not only the lives of individuals but our collective life as a society, is to be a civil right for all."
"Never before has the idea of the university been so feverishly debated in England, and for good reason. The restructuring of the country's higher education sector around a student-debt-financed, fee-driven model is a fundamental recasting of the university's place and purpose in society. But this process did not begin with the government's higher education White Paper or even with the Browne Report that laid the ground for it. And neither is it confined to the UK."
"The neoliberal transformation of higher education is a global phenomenon. In the Americas, Europe, Russia and its former colonies, the Middle East, Africa, South Asia and Australasia, higher education is being rebranded as a private investment and the university repurposed to generate profit and economic growth. As a consequence, academics and students are confronting very similar conditions across the world: the escalation of fees and student debt, the expansion of management and administrative systems for measuring the efficiency of services, the quest for a plethora of new types of fee-paying consumers, and the casualisation of academic labour."
"Is it any wonder then that, despite the continuing protests, the majority of students and their teachers are resigned to the privatisation of higher education in England? Many, it seems, have accepted the logic that the public funding for higher education was only possible when the system educated only a privileged elite. It is as if the public value of higher education somehow mysteriously evaporates when it is more democratically available."
"Preventing the headlong rush to a new idea of the consumer-orientated and profit-centred university requires more than outrage, protest or even the publication of alternative White Papers, necessary as all of them are. We must first try to understand how we arrived at the point where a redirection of public funds to support sub-prime loans for student-debt-financing of higher education seemed natural and inevitable. It is no longer sufficient to nostalgically invoke a better idea of the university, of a golden age of public funding, without understanding how it became so vulnerable to a critique that has eventually eviscerated it."
"While the words "access" and "fairness" are abused by ministers, these terms speak to a continuing belief among the electorate that universities are powerful engines of social mobility. It is this idea we must appeal to if publicly funded university education, which enriches not only the lives of individuals but our collective life as a society, is to be a civil right for all."
Seattle's Garfield High School Student Walkout and March Against Budget Cuts
"Seattle Public Schools have seen the loss of librarians, much-needed family service counselors and college admissions counselors, the reduction of the arts to “art on a cart” and school principals and staff making difficult decisions on the number of teachers they can budget for. School facilities are in poor condition and many buildings are not safe in terms of earthquake code."
"The students of Garfield High School issued a statement on their Facebook page. It goes as follows:
"The students of Garfield High School issued a statement on their Facebook page. It goes as follows:
"We are Washington State Public Schools students tired of the constant cuts to our education. We are the people who have been affected most by these cuts, and we are showing that we care. For too long, this stat…e’s budget has been balanced on the backs of its students. Apparently, our representatives in Olympia have forgotten that the Washington Constitution says that funding education is this state’s “paramount duty”. This is a student voice reminding our legislature of that fact. And also of this one: We are this country’s future. We will vote. And we will hold them accountable."
"We have two primary goals we hope to accomplish:
-We want to stop the constant cuts to education that have hurt our school and other schools in the state.
-We want to insert a student voice into the political discourse in issues regarding education."
The Austerity Trap & Student Debt at One Trillion with Ian Masters
"We begin with the former Secretary of Labor Robert Reich and discuss the austerity trap that the economy is stuck in with political gridlock and election politics digging the hole deeper. However there is some reason to hope that as the powerful and privileged one percent try to take us back to the Gilded Age, a movement forming might rally the nation to reclaim the American Dream for the 99%."
"Then we look into the shameful growth of student debt that will reach one trillion dollars this year. David Halperin, who is the director of Campus Progress at the Center for American Progress joins us to explain the increasing debt load students are now burdened with as they face a shrinking jobs market, and how lobbyists for the for-profit college industry have managed to get Congress to have taxpayer money charged back to unwitting students at exorbitant rates for a worthless education and a useless diploma."
"Then we look into the shameful growth of student debt that will reach one trillion dollars this year. David Halperin, who is the director of Campus Progress at the Center for American Progress joins us to explain the increasing debt load students are now burdened with as they face a shrinking jobs market, and how lobbyists for the for-profit college industry have managed to get Congress to have taxpayer money charged back to unwitting students at exorbitant rates for a worthless education and a useless diploma."
NYT: Killing the Euro by Paul Krugman
"Can the euro be saved? ... Even optimists now see Europe as headed for recession, while pessimists warn that the euro may become the epicenter of another global financial crisis."
"How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. But the truth is nearly the opposite. Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse."
"During the years of easy money, wages and prices in southern Europe rose substantially faster than in northern Europe. This divergence now needs to be reversed, either through falling prices in the south or through rising prices in the north. And it matters which: If southern Europe is forced to deflate its way to competitiveness, it will both pay a heavy price in employment and worsen its debt problems. The chances of success would be much greater if the gap were closed via rising prices in the north."
"But to close the gap through rising prices in the north, policy makers would have to accept temporarily higher inflation for the euro area as a whole. And they’ve made it clear that they won’t. Last April, in fact, the European Central Bank began raising interest rates, even though it was obvious to most observers that underlying inflation was, if anything, too low."
"The combination of austerity-for-all and a central bank morbidly obsessed with inflation makes it essentially impossible for indebted countries to escape from their debt trap and is, therefore, a recipe for widespread debt defaults, bank runs and general financial collapse."
"I hope, for our sake as well as theirs, that the Europeans will change course before it’s too late. But, to be honest, I don’t believe they will. In fact, what’s much more likely is that we will follow them down the path to ruin."
"For in America, as in Europe, the economy is being dragged down by troubled debtors — in our case, mainly homeowners. And here, too, we desperately need expansionary fiscal and monetary policies to support the economy as these debtors struggle back to financial health. Yet, as in Europe, public discourse [in the US] is dominated by deficit scolds and inflation obsessives."
"How did things go so wrong? The answer you hear all the time is that the euro crisis was caused by fiscal irresponsibility. But the truth is nearly the opposite. Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending in Europe as a whole. And their efforts to fix matters by demanding ever harsher austerity have played a major role in making the situation worse."
"During the years of easy money, wages and prices in southern Europe rose substantially faster than in northern Europe. This divergence now needs to be reversed, either through falling prices in the south or through rising prices in the north. And it matters which: If southern Europe is forced to deflate its way to competitiveness, it will both pay a heavy price in employment and worsen its debt problems. The chances of success would be much greater if the gap were closed via rising prices in the north."
"But to close the gap through rising prices in the north, policy makers would have to accept temporarily higher inflation for the euro area as a whole. And they’ve made it clear that they won’t. Last April, in fact, the European Central Bank began raising interest rates, even though it was obvious to most observers that underlying inflation was, if anything, too low."
"The combination of austerity-for-all and a central bank morbidly obsessed with inflation makes it essentially impossible for indebted countries to escape from their debt trap and is, therefore, a recipe for widespread debt defaults, bank runs and general financial collapse."
"I hope, for our sake as well as theirs, that the Europeans will change course before it’s too late. But, to be honest, I don’t believe they will. In fact, what’s much more likely is that we will follow them down the path to ruin."
"For in America, as in Europe, the economy is being dragged down by troubled debtors — in our case, mainly homeowners. And here, too, we desperately need expansionary fiscal and monetary policies to support the economy as these debtors struggle back to financial health. Yet, as in Europe, public discourse [in the US] is dominated by deficit scolds and inflation obsessives."
FT: The coming firesale of student loan ABS
This Financial Times article dated July 22, 2011, prior to the summer resolution of the US debt ceiling charade, shows the continuing vulnerability of bonds based on student loans, despite decades of legal and monetary support by the government:
"The coming firesale of student loan ABS"
"Posted by John McDermott on Jul 22 19:24."
"The potential contents of a firesale if there is a downgrade of the US’s AAA rating are receiving a fair bit of attention, as investment funds weigh up what they can and should do in the event."
"Defeased or prefunded securities are uniquely vulnerable and, according to a note out Thursday by Citigroup’s securitised products team, so are the $250bn of asset backed securities linked to the Federal Family Education Loan Program (FFELP)."
"FFELP was a federally-guaranteed student loan scheme used by three-quarters of US colleges. Technically, it’s not a guarantee but the federal government does provide 97 per cent (according to S&P) reinsurance on the outstanding loans. Thus there’s a direct link between the AAA sovereign and the AAA FFELP ABS. (21 Srabble points, if you’re wondering.) Moody’s listed these securities as a related risk when it placed the US on review for possible downgrade and now Citi reckons they’re the main form of ABS to worry about:"
"The coming firesale of student loan ABS"
"Posted by John McDermott on Jul 22 19:24."
"The potential contents of a firesale if there is a downgrade of the US’s AAA rating are receiving a fair bit of attention, as investment funds weigh up what they can and should do in the event."
"Defeased or prefunded securities are uniquely vulnerable and, according to a note out Thursday by Citigroup’s securitised products team, so are the $250bn of asset backed securities linked to the Federal Family Education Loan Program (FFELP)."
"FFELP was a federally-guaranteed student loan scheme used by three-quarters of US colleges. Technically, it’s not a guarantee but the federal government does provide 97 per cent (according to S&P) reinsurance on the outstanding loans. Thus there’s a direct link between the AAA sovereign and the AAA FFELP ABS. (21 Srabble points, if you’re wondering.) Moody’s listed these securities as a related risk when it placed the US on review for possible downgrade and now Citi reckons they’re the main form of ABS to worry about:"
Al Jazeera: Meltdown, The men who crashed the world
"Meltdown is a four-part investigation into a world of greed and recklessness
that brought down the financial world. The show begins with the 2008
crash that pushed 30 million people into unemployment, brought countries
to the edge of insolvency and turned the clock back to 1929."
"But how did it all go so wrong? Lack of government regulation; easy
lending in the US housing market meant anyone could qualify for a home
loan with no government regulations in place. Also, London was competing
with New York as the banking capital of the world. Gordon Brown, the
British finance minister at the time, introduced "light touch
regulation" - giving bankers a free hand in the marketplace."
"Meltdown moves on to examine the epidemic of fear that caused the world's banks to stop lending and how the people began their fight back. Finally, it asks how the world can prepare for the next crisis even as it recognises that this one is far from over."
"We hear about the sheikh who says the crash never happened; a Wall
Street king charged with fraud; a congresswoman who wants to jail the
bankers; and the world leaders who want a re-think of capitalism."
Global rebellion: The coming chaos? by William Robinson
"As the crisis of global capitalism spirals out of control, the powers that be in the global system appear to be adrift and unable to proposal viable solutions... Simply put, the immense structural inequalities of the global political economy can no longer be contained through consensual mechanisms of social control. The ruling classes have lost legitimacy; we are witnessing a breakdown of ruling-class hegemony on a world scale."
"We need to see the big picture in historic and structural context."
"First, this crisis shares a number of aspects with earlier structural crises of the 1930s and the 1970s, but there are also several features unique to the present: The system is fast reaching the ecological limits of its reproduction. We face the real spectre of resource depletion and environmental catastrophes that threaten a system collapse."
"Second, global elites are unable to come up with solutions. They appear to be politically bankrupt and impotent to steer the course of events unfolding before them."
"Third, there will be no quick outcome of the mounting global chaos. We are in for a period of major conflicts and great upheavals. As I mentioned above, one danger is a neo-fascist response to contain the crisis."
"Fourth, popular forces worldwide have moved quicker than anyone could imagine from the defensive to the offensive. The initiative clearly passed this year, 2011, from the transnational elite to popular forces from below."
"The global revolt underway has shifted the whole political landscape and the terms of the discourse. Global elites are confused, reactive, and sinking into the quagmire of their own making. It is noteworthy that those struggling around the world have been shown a strong sense of solidarity and are in communications across whole continents... On the other hand, the "empire of global capital" is definitely not a "paper tiger". As global elites regroup and assess the new conjuncture and the threat of mass global revolution, they will - and have already begun to - organise coordinated mass repression, new wars and interventions, and mechanisms and projects of co-optation in their efforts to restore hegemony."
"In my view, the only viable solution to the crisis of global capitalism is a massive redistribution of wealth and power downward towards the poor majority of humanity along the lines of a 21st-century democratic socialism in which humanity is no longer at war with itself and with nature."
"We need to see the big picture in historic and structural context."
"First, this crisis shares a number of aspects with earlier structural crises of the 1930s and the 1970s, but there are also several features unique to the present: The system is fast reaching the ecological limits of its reproduction. We face the real spectre of resource depletion and environmental catastrophes that threaten a system collapse."
"Second, global elites are unable to come up with solutions. They appear to be politically bankrupt and impotent to steer the course of events unfolding before them."
"Third, there will be no quick outcome of the mounting global chaos. We are in for a period of major conflicts and great upheavals. As I mentioned above, one danger is a neo-fascist response to contain the crisis."
"Fourth, popular forces worldwide have moved quicker than anyone could imagine from the defensive to the offensive. The initiative clearly passed this year, 2011, from the transnational elite to popular forces from below."
"The global revolt underway has shifted the whole political landscape and the terms of the discourse. Global elites are confused, reactive, and sinking into the quagmire of their own making. It is noteworthy that those struggling around the world have been shown a strong sense of solidarity and are in communications across whole continents... On the other hand, the "empire of global capital" is definitely not a "paper tiger". As global elites regroup and assess the new conjuncture and the threat of mass global revolution, they will - and have already begun to - organise coordinated mass repression, new wars and interventions, and mechanisms and projects of co-optation in their efforts to restore hegemony."
"In my view, the only viable solution to the crisis of global capitalism is a massive redistribution of wealth and power downward towards the poor majority of humanity along the lines of a 21st-century democratic socialism in which humanity is no longer at war with itself and with nature."
NYT: Official Calls for Urgency on College Costs
“Three in four Americans now say that college is too expensive for most people to afford,” Mr. Duncan said. “That belief is even stronger among young adults — three-fourths of whom believe that graduates today have more debt than they can manage.”
"College seniors with loans now graduate with an average debt load of more than $25,000. With outstanding student debt nearing $1 trillion — and exceeding credit-card debt — it makes sense that, as Patrick M. Callan, president of the Higher Education Policy Institute, put it, college costs are in the spotlight as never before."
"Just before Thanksgiving, Occupy Wall Street spawned the Occupy Student Debt Campaign, which asks for zero interest on student debt, federally financed public higher education and the forgiveness of all existing debt. At Occupystudentdebtcampaign.com, the campaign asks donors to sign a Pledge of Refusal, which promises that when a million signatures have been gathered, all will cease to make their debt payments."
“It’s basically a strike threat, but it gives debtors, many of whom have gray hair at this point, a way to act collectively, rather than suffer the agony and isolation of their debt,” said Andrew Ross, a New York University professor who is one of the organizers of the campaign. “We think education is a right and a public good, and we think federal funding is the only way the United States can join the list of other countries that offer free public education.”
"College seniors with loans now graduate with an average debt load of more than $25,000. With outstanding student debt nearing $1 trillion — and exceeding credit-card debt — it makes sense that, as Patrick M. Callan, president of the Higher Education Policy Institute, put it, college costs are in the spotlight as never before."
"Just before Thanksgiving, Occupy Wall Street spawned the Occupy Student Debt Campaign, which asks for zero interest on student debt, federally financed public higher education and the forgiveness of all existing debt. At Occupystudentdebtcampaign.com, the campaign asks donors to sign a Pledge of Refusal, which promises that when a million signatures have been gathered, all will cease to make their debt payments."
“It’s basically a strike threat, but it gives debtors, many of whom have gray hair at this point, a way to act collectively, rather than suffer the agony and isolation of their debt,” said Andrew Ross, a New York University professor who is one of the organizers of the campaign. “We think education is a right and a public good, and we think federal funding is the only way the United States can join the list of other countries that offer free public education.”
WashPo: "Student debt will soon reach $1 trillion"
"The Federal Reserve Bank of New York says that overall consumer debt dropped about $60 billion, to $11.66 trillion, in the third quarter. But as consumers cut their mortgage and credit card debt, they apparently were loading up on student loans."
"In its August report, the New York Fed reported student loans outstanding at $550 billion. Its revised figure shows that in the second quarter, the amount outstanding was actually $845 billion — 53.7 percent higher than what was first reported. In the third quarter, total student-loan debt was $865 billion. These figures dwarf credit card debt, which was $694 billion in the second quarter and $693 billion in the third."
"The New York Fed report is only the latest to reach a certain conclusion: Student-loan debt is reaching incredible heights. Last year, total student-loan debt passed total credit card debt for the first time."
"Mark Kantrowitz, publisher of FinAid (www.finaid.org), one of the best sites for college financial aid information, has created a Student Loan Debt Clock at www.finaid.org/loans/studentloandebtclock.phtml. The clock is an estimate of current student-loan debt outstanding, including both federal and private student loans. My last check showed more than $960 billion."
"Here’s what concerns me: All the estimates point to a disturbing milestone. If families continue the current borrowing trend, total student-loan debt will soon reach $1 trillion."
"In its August report, the New York Fed reported student loans outstanding at $550 billion. Its revised figure shows that in the second quarter, the amount outstanding was actually $845 billion — 53.7 percent higher than what was first reported. In the third quarter, total student-loan debt was $865 billion. These figures dwarf credit card debt, which was $694 billion in the second quarter and $693 billion in the third."
"The New York Fed report is only the latest to reach a certain conclusion: Student-loan debt is reaching incredible heights. Last year, total student-loan debt passed total credit card debt for the first time."
"Mark Kantrowitz, publisher of FinAid (www.finaid.org), one of the best sites for college financial aid information, has created a Student Loan Debt Clock at www.finaid.org/loans/studentloandebtclock.phtml. The clock is an estimate of current student-loan debt outstanding, including both federal and private student loans. My last check showed more than $960 billion."
"Here’s what concerns me: All the estimates point to a disturbing milestone. If families continue the current borrowing trend, total student-loan debt will soon reach $1 trillion."
Writing on the Wall by Vijay Prashad
"One of the most difficult elements of advanced capitalism and modern society is that it is hard to identify the culprit for one's sorrows. In feudal days, there was always the baron's castle or the moneylender's office; they could be located, and the peasantry could convert their agricultural implements into weapons as they rushed to these sites. No such ease in our times.
"Abstract social domination makes it harder to point precisely to the cause of one's distress. Banks often stand in for the problem, being the front lines of financial capital – it is banks, after all, that foreclose on houses and deny credit. But the banks are only a cog in a complex system that is built upon the simple premise that only a few people are able to wield power and property for their betterment, whereas the vast mass of people have only the illusion of property and the hopes for power."
"The banks stand in for the system in general."
"Events in the U.S. are linked closely to the convulsions in the rim of southern Europe, from Greece to Spain via Italy. The root cause of the older crisis and the more recent one is the same, as pointed out by the Greek economist Yanis Varoufakis in his new book, The Global Minotaur: The True Origins of the Financial Crisis and the Future of the World Economy (2011): it has to do with the failure of the world economic system to have a surplus recycling mechanism that would redistribute accumulated surpluses across the world."
"Rather than have such a mechanism, the mandarins of the world order in the 1970s and 1980s preferred to allow vast surpluses to get sucked into the world of finance (with New York's Wall Street as its centre). This institutional failure was the cause of the new culture of greed (and not the other way around). That the political class in the Atlantic world prefers to see the solution in austerity policies against the ordinary people rather than in terms of institutional failures (let alone the system's failure) demonstrates the vacuity of its leadership. Since it offers no new political and economic project to earn the trust of the population, it must resort to the baton."
"The baton offers no solutions. The writing for the Street is on the wall."
"Abstract social domination makes it harder to point precisely to the cause of one's distress. Banks often stand in for the problem, being the front lines of financial capital – it is banks, after all, that foreclose on houses and deny credit. But the banks are only a cog in a complex system that is built upon the simple premise that only a few people are able to wield power and property for their betterment, whereas the vast mass of people have only the illusion of property and the hopes for power."
"The banks stand in for the system in general."
"Events in the U.S. are linked closely to the convulsions in the rim of southern Europe, from Greece to Spain via Italy. The root cause of the older crisis and the more recent one is the same, as pointed out by the Greek economist Yanis Varoufakis in his new book, The Global Minotaur: The True Origins of the Financial Crisis and the Future of the World Economy (2011): it has to do with the failure of the world economic system to have a surplus recycling mechanism that would redistribute accumulated surpluses across the world."
"Rather than have such a mechanism, the mandarins of the world order in the 1970s and 1980s preferred to allow vast surpluses to get sucked into the world of finance (with New York's Wall Street as its centre). This institutional failure was the cause of the new culture of greed (and not the other way around). That the political class in the Atlantic world prefers to see the solution in austerity policies against the ordinary people rather than in terms of institutional failures (let alone the system's failure) demonstrates the vacuity of its leadership. Since it offers no new political and economic project to earn the trust of the population, it must resort to the baton."
"The baton offers no solutions. The writing for the Street is on the wall."
Subscribe to:
Posts (Atom)