What’s the old adage? Never engage in a land war in Asia? Well we tossed that one out a while ago and now it looks like we might be heading for one on the high seas. No kidding. China is building island bases in the South China Sea, right over massive deposits of oil and smack dab in the middle of Asian trade routes, and we are not happy about it. In fact we’ve ordered China to essentially stop immediately. They are not complying, and are using diplomatic talk of the kind which isn’t very diplomatic.
We have gotten to the point where sober minded people (well probably most of the time) with serious skin in the game are getting concerned.
Interesting because a whole lot of people disagree with the very very statist and crony Lula da Silva. In fact hundreds of thousands turned out in the street to protest this ongoing system (and the current president) just a few of weeks ago.
Menos Marx. Mais Mises.
At this point if you still have a pile of euros in a Greek bank you almost deserve to be taxed in such a terrible way. Of course most of the accounts in play here aren’t stuffed to the gills with money but are everyday accounts used for paying rent and buying groceries.
But not to worry, rich folks may soon see capital controls on transfers of over a million euros. And if you have a million euros in a Greek bank at this point, after all that has happened, I don’t have all that much sympathy.
Both the withdrawal tax and the capital controls still have to be approved by authorities. One can only assume that queues are wrapping around the Athens Wells Fargo as I write this.
I read something somewhere which went something like this;
“Those who don’t understand interest pay it. Those who do earn it.”
This is an oversimplification but the spirit is right on the money (so to speak.) Vast swathes of the suburbs are awash in debt. It contributes greatly to the quiet (so quiet that for many it is unspoken) desperation of the American middle class. It’s pretty sad actually. Particularly when the banks lending via credit cards are getting their money at near 0% interest from the Fed.
Call it the new abnormal.
Since 2008 the world has been turned upside down. In our collective panic we have disrupted whatever used to pass for economic homeostasis. Now the globe is moving (moved) toward a negative interest rate environment for government bonds.
Please, take my money. I’ll pay you to take my money! Why am I paying a government to hold my money? Well, because the economy is so healthy of course.
The Fed will always be able to stop a crash. Just like how the prices of houses always go up?
Holy moly, real live economic sanity on the pages of The New York Times!
And on the subject of higher education costs to boot. One of the editors must have been out sick or on peyote or something.
My wife and I were just talking about how we hoped the student debt bubble would hurry up and deflate. We have kids to put through school in the not too distant future and the sooner things settle out the better. The current situation cannot continue. Tuitions are unsustainable. Student debt has fueled a bubble in the University system and it is going to end. Perhaps badly.
This week we may have gotten a glimpse of things to come. Just down the road from me, Sweet Briar College has decided to close up shop. Mark Cuban thinks it’s the first of many.
It’s a simple truism. Everything, everything, has a cost. What appears to be free isn’t. Debt fueled spending? That comes from somewhere. It’s not like the law of thermodynamics was somehow suspended for economic purposes.
But many people act like it has been. This is folly.
Has anyone else noticed that the world has been in a depression since 2008? And NOW they’ve lost “control”?
Fundamentally it comes down to whether one thinks one can get something for nothing. If it has been your experience that something can actually be gotten for nothing, no work, no money, no “other people’s money,” no blood, then congratulations. You live in an easier world than the rest of us. If however you are inclined to think that for every action there is an equal and opposite reaction, then perhaps you should be concerned about the piles of sovereign debt stretching into the wispy stratosphere.
The stakes are now so high for the proponents of central bank debt creation that even if they saw the error of their ways (unlikely) they will still run us off a cliff if unchecked.
But don’t worry. The market is up, we’re at a 5.6% unemployment rate, so the fact that not even half of student borrowers can afford their college debt is nothing to worry about. It’s not like we need young people to buy houses or start businesses. No, no, everything is just fine in the crony economy. So long as the professors get paid that’s what really matters.
(From The Washington Examiner)
Of the group that left school in 2009 with only $1,000 to $5,000 in debt, nearly 60 percent either have been delinquent, have defaulted (meaning that they fell 270 days behind on a payment), or have balances larger today than they were in 2009, because of deferrals or other delayed-repayment programs. Many of those troubled borrowers are non-graduates who took out some debt but then did not finish college and accordingly missed out on higher-paying jobs that could have helped them handle their loan payments.
Many people with starting balances over $50,000 or $100,000 also had higher balances today than in 2009. Those were more likely to be students who got professional degrees and then used income-based repayment programs, which cap payments as a share of income and then eventually forgive the debt after 20 or 25 years. That could ultimately prove financially advantageous for those borrowers, but in the meantime, the New York Fed notes, those borrowers’ credit scores will suffer as their loan balances aren’t getting paid down.
Click here for the article.
Debt is addictive. Once one gets on the stuff it is nearly impossible to get off of. And like all hard drugs, sooner or later debt will extract its toll. It certainly did in 2008. But instead of getting sober and real after that fateful year the world went on a binge instead. Not a very healthy thing to do. There will be pain, likely quite a lot of pain when the debt stops “working.”
When will reality come calling? It already has in many parts of the globe. But even the instability we see now is likely only a precursor of what is on the way.
Hard to buy a house when one already has the equivalent of a mortgage attached to one’s name. Hard to start a family when the Sallie Mae payments take all the money for diapers. Hard to start a business when one enters the world already less than zero on the capital ledger.
Zero’s hard enough.
The problem is easy money to students. Think about it. Who in their right mind lends $50,000 to an 18 year old who has never had a real job, no credit history, etc? The federal government does.