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Half of the US government's financial assets are student loans

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Re: Half of the US government's financial assets are student loans

#31

Post by marcelluspye »

matte_black wrote: post #13
jjoonathan wrote: post #3

Oof. What happens when a huge chunk of these default because educating everyone doesn't magically create jobs for everyone?

The banks that loaned out all that money will need massive bailouts or else shut down. Let’s be clear, students will NEVER be allowed to default these loans, nor should they. They must either pay it or take their debt to the grave and pass it down to their heirs.

>pass it down to their heirs.

AFAIK, (and I'm a pretty ignorant fellow) debt in America isn't passed down, the creditors just take what they're owed out of a dead person's estate before its divied up by a will. So there could be a big "pop" if a bunch of people with lots of student loan debt and no assets die.

Re: Half of the US government's financial assets are student loans

#32

Post by jdoliner »

Anytime the US wants the world to be a certain way but just can't quite get reality to conform debt is our answer. Everyone should be a homeowner but for some reason isn't? Simple, just give them cheap loans for houses. Everyone should be educated but it doesn't seem to be happening? Debt time. Why do we do this? Because it allows us to pretend that complicated long-term structural problems are simple short-term capital problems. People just need some activation energy to get over the hump, that's all. We're addicted to debt, if we ever admitted that it's not solving these problems for us we'd have to contend with reality, and who wants to do that? Especially a reality as dismal as that of public education.

Re: Half of the US government's financial assets are student loans

#33

Post by r00fus »

marcelluspye wrote: post #20
tboyd47 wrote: post #7

Earlier quoted context omitted.

> you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Sorry, what does that mean?

I believe what they were implying was that such a bubble can only "pop" if a bunch of the debt is discharged at once, which in this case means a bunch of people who still owe student loans on their deathbed die with more debt than assets. The commenter suggested trying to figure out when this would happen, and making sure one is ahead of it.

> and making sure one is ahead of it.

I was with you till the last bit. How does one "keep ahead" with that timescale?

Re: Half of the US government's financial assets are student loans

#34

Post by matte_black »

r00fus wrote: post #27
matte_black wrote: post #13

Earlier quoted context omitted.

The banks that loaned out all that money will need massive bailouts or else shut down. Let’s be clear, students will NEVER be allowed to default these loans, nor should they. They must either pay it or take their debt to the grave and pass it down to their heirs.

> Let’s be clear, students will NEVER be allowed to default these loans, nor should they. Why not?

Because that was the deal.

Re: Half of the US government's financial assets are student loans

#36

Post by noobermin »

hidenotslide wrote: post #17
mxpxrocks10 wrote: post #2

is this for real? does anyone have any info that proves this right/wrong?

Almost assuredly false. The Federal Reserve balance sheet is US treasuries and mortgages, and Fannie Mae/Freddie Mac are mortgages as well. Probably not a complete data set.

If that's the case, shouldn't this be flagged?

Also, you mentioned the Fed, which isn't the same thing as the US gov't, right?

Re: Half of the US government's financial assets are student loans

#37

Post by MollyR »

US government backed student loans were a huge mistake.

We needed something like rent control enforced on public universities, for government backed loans. But we didn't.

So it created a situation that caused an enormous amount of millennials to be taken advantage of by universities and colleges. Those universities and colleges pumped full of government loan cash became increasingly predatory. They increased their administrative costs, they increased their tuition costs, and they lured unsuspecting teenagers into taking enormous debt for worthless degrees like gender studies over engineering.

This has been a catastrophe, that will be used as a case study of unintended consequences.

The extreme amount of student loans has lead to extreme unrest, unless action is taken quickly it will only get worse. We see it in the rise of the alt-left and alt-right fueled by extreme fanatics in desperate and angry situations.

Re: Half of the US government's financial assets are student loans

#38

Post by ctrl-j »

matte_black wrote: post #13
jjoonathan wrote: post #3

Oof. What happens when a huge chunk of these default because educating everyone doesn't magically create jobs for everyone?

The banks that loaned out all that money will need massive bailouts or else shut down. Let’s be clear, students will NEVER be allowed to default these loans, nor should they. They must either pay it or take their debt to the grave and pass it down to their heirs.

> Let’s be clear, students will NEVER be allowed to default these loans, nor should they. They must either pay it or take their debt to the grave and pass it down to their heirs.

You wanna try that again with a little empathy?

Re: Half of the US government's financial assets are student loans

#39

Post by fixermark »

marcelluspye wrote: post #20
tboyd47 wrote: post #7

Earlier quoted context omitted.

> you need to calculate where the knee in the curve of issuing them was, extrapolate to life expectancy, and know when to cash out. Sorry, what does that mean?

I believe what they were implying was that such a bubble can only "pop" if a bunch of the debt is discharged at once, which in this case means a bunch of people who still owe student loans on their deathbed die with more debt than assets. The commenter suggested trying to figure out when this would happen, and making sure one is ahead of it.

Correct. The question is what, precisely, you'd use to bet against the student loan market. Since of the people who "successfully" shorted real estate found themselves running into trouble cashing out because the same institutions they'd bet against got hammered when housing popped and themselves defaulted. How do you successfully bet against the stability of the world-stabilizing fiat currency---the one other countries jam under their mattresses to back-stop against domestic economic turmoil?

Re: Half of the US government's financial assets are student loans

#40

Post by chatmasta »

mylons wrote: post #29
chatmasta wrote: post #26

Earlier quoted context omitted.

Just because someone can’t default on their loan doesn’t mean they can pay it. It’s also not hard for me to imagine, in the near future, a social media movement like “don’t pay back your loans.”

ya, I had this thought as well, but then the IRS garnishes your wages until you die. So how does it pop? Seems like a lot of people would have to go to jail or something along those lines for it to actually happen?

They can only garnish your wages if you’re a W2 employee, or use the banking system. Contractors need to pay their own taxes, and the IRS can’t garnish what it can’t see.

Gig economy + cryptocurrency + social media + student loan debt could lead to some very interesting times.

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