Posted On: Wednesday - March 3rd 2021 6:11PM MST
In Topics: University Global Financial Stupidity Economics Zhou Bai Dien
Note: This school loan business is really domestic financial stupidity rather than Global Financial Stupidity. However, the financial stupidity going on is pretty much global is scope (the government of China, for example, performs many of the same acts of stupidity as does the US Feral Gov't), and, well, you work with the Topic Key you have, or something...
The 2 headlines above give us the gist of the University Student Loan problem in this country. It's a pretty serious amount of money, 1 1/2 Trillion Dollars is. Peak Stupidity was about to get into a rant about the causes of the problem and proposed solution, but I noted we'd done this before, about 1 1/2 years ago, in the series "Student loan debt and forgiveness": Part 1, Part 2, and Part 3*.
The idea of the US Gov't waving it's magic money wand and forgiving these debts has been bandied about for a few years. From a writer name Rick Moran at the PJ Media site, Student Loan Debtors Refusing to Pay Off Debt in Anticipation of Biden Forgiveness. The article gives some facts about the political situation, but the author is wishy-washy in his opinion on the forgiveness "solution". I'd have expected a bit better from PJ Media.
I suppose since Presidents and Congress just blow a half Trillion here and a half Trillion there, I can see why people (other than the students in debt themselves) may think "oh, sure, why the hell not? Poor kids, starting out in life ..." Yeah, well, you may want to go back to our Part 3 of that series linked-to above, but let me give the gist of it. It's not just the money blown by the taxpayers for students to knock out 4 or 5 years at Indoctrination U, some having a big long party in the process.
There are 2 big moral hazards. One is that the students who DID try to be responsible, maybe forgoing all the partying and buying of nice vehicles, maybe working in the evenings and summers to help keep the final number down to only $15,000 or so, have a right to be very pissed off. It's not just that they will be pissed. Socialism pisses off a lot of people by screwing them - "Welcome to the Party, Pal!" No, the bigger problem is that these people will have been taught that "responsibility DOES! NOT! PAY!" and even "responsibility means GETTING! SCREWED!" From then on, I wouldn't blame them if they became just as irresponsible as the rest of them.
Secondly, the Universities will have the current big benefit of guaranteed-to-collect high student tuition due to the US Feral Gov't's loan guarantees doubled down on. From now on, nobody will get all responsible and protest or even balk at tuition increases. "C'mon, don't be a sap - only suckers pay loans back."
The headline of the PJ Media article shows that there is an advance moral hazard, if I may, going on, just due to mention of loan forgiveness plans. I see that "Some student loan debtors have decided to have a “debt strike” and refuse to pay on their loans until Biden acts." Great.
Yeah, student loan forgiveness means College is FREE, FREE I tells ya'! By free we really mean "free" ... till what can't go on, won't go on. The shit WILL hit the fan. We've all read the economist's maxim "there is no free lunch." A Peak Stupidity corollary goes "there is no free lunch, unless you are OK with having pieces of shit that are flying off a fan for lunch."
One more thing that pissed me when I read here, there, and everywhere: Nowadays the President is just assumed by everyone to have powers that were not permitted for him by the US Constitution, such as MAKING FREAKING LAWS! Oh, that's what Executive Orders are about, right? I mean, if the media discussed Presidents using the bully pulpit or pushing for such and such a thing, that would sit better in my stomach. This is the way it is now (same article):
Biden has yet to issue an executive order on student loan debt. Many Democrats are urging the president to cancel $50,000 in debt with the stroke of a pen. But Biden says he would much rather involve Congress in the decision. [My bolding]How very kind of him to involve the Congress! This country's just ... too damn far gone.
*
Comments:
Moderator
Friday - March 5th 2021 7:45AM MST
PS: Peter, that plan would work as your foresee. You've got my vote for King Ike II... wait a minute ..
Alarmist, I'd brought up the fact that about 1/2 or 1 days's spending by the Feral Gov't could have made an appropriate border barrier, with 2 sets of good fencing and a no-man's land as you say, even at the same cost of Interstate Highway mileage. Seeing as those highways have lots more involved (see my post) that's a real HIGH-BALL estimate too. Then, I calculated very simply that those 25,000 soldiers, sailors, and airmen that have been in Korea for 68 years (not the same guys!) could easily completely man the whole deal.
Here:
"Border control vs. the interstate highway system" -
https://www.peakstupidity.com/index.php?post=239
and
"Border control maintenance vs. defending some Koreans from other Koreans" -
https://www.peakstupidity.com/index.php?post=240
Your last part reminded me of that book I review "The Mandibles" in which capital controls are implemented to catch those bringing out cash (before the dollar was basically eliminated), and there was effective border control in the south to keep gringos from heading into Mexico. Maybe we'll have the wall built just in time for that, yes.
Alarmist, I'd brought up the fact that about 1/2 or 1 days's spending by the Feral Gov't could have made an appropriate border barrier, with 2 sets of good fencing and a no-man's land as you say, even at the same cost of Interstate Highway mileage. Seeing as those highways have lots more involved (see my post) that's a real HIGH-BALL estimate too. Then, I calculated very simply that those 25,000 soldiers, sailors, and airmen that have been in Korea for 68 years (not the same guys!) could easily completely man the whole deal.
Here:
"Border control vs. the interstate highway system" -
https://www.peakstupidity.com/index.php?post=239
and
"Border control maintenance vs. defending some Koreans from other Koreans" -
https://www.peakstupidity.com/index.php?post=240
Your last part reminded me of that book I review "The Mandibles" in which capital controls are implemented to catch those bringing out cash (before the dollar was basically eliminated), and there was effective border control in the south to keep gringos from heading into Mexico. Maybe we'll have the wall built just in time for that, yes.
The Alarmist
Friday - March 5th 2021 4:39AM MST
PS
@PeterIke said, “Illegal immigration problem? Ok, any illegal captured on American soil will be executed the same day, like a spy in wartime. No trials, nothing. You've got a six month grace period to get out of here. Illegal immigration problem solved!! “
Defending borders is so Nineteenth Century, man.
But seriously, we shouldn’t kill them if they were captured peacefully in-country, but should certainly send the back across the border without delay. Where you get a righteous shoot is when they try to cross that border, as an invader.
BTW, the only reason the border wall/fence is not that effective is because we have no land-mined “dead-man’s zone” straddling it. Instead of 5k troops in DC, a serious CIC would have them in guard towers along the border with orders to shoot to kill.
You can bet your bottom dollar these last two things will be put in place once the emigration of American tax-donkeys begins in earnest.
@PeterIke said, “Illegal immigration problem? Ok, any illegal captured on American soil will be executed the same day, like a spy in wartime. No trials, nothing. You've got a six month grace period to get out of here. Illegal immigration problem solved!! “
Defending borders is so Nineteenth Century, man.
But seriously, we shouldn’t kill them if they were captured peacefully in-country, but should certainly send the back across the border without delay. Where you get a righteous shoot is when they try to cross that border, as an invader.
BTW, the only reason the border wall/fence is not that effective is because we have no land-mined “dead-man’s zone” straddling it. Instead of 5k troops in DC, a serious CIC would have them in guard towers along the border with orders to shoot to kill.
You can bet your bottom dollar these last two things will be put in place once the emigration of American tax-donkeys begins in earnest.
Adam Smith
Thursday - March 4th 2021 9:55PM MST
PS: Good evening Robert...
I hope this message finds you well...
"A simple solution (therefore impossible)..."
There is elegance in simplicity...
☮
I hope this message finds you well...
"A simple solution (therefore impossible)..."
There is elegance in simplicity...
☮
Robert
Thursday - March 4th 2021 5:00PM MST
PS: A simple solution (therefore impossible) would be to make student loans and income tax debt dischargable through bankruptcy, like almost all other debt.
PeterIke
Thursday - March 4th 2021 12:56PM MST
PS
Mod, yeah for sure I know this couldn't happen. And OF COURSE the Dems and GOPe would act in bad faith about all of it. And anyway, if Trump had killed all student loans, Biden would have brought it back right away. Even if Trump killed the Dept of Ed, Biden would bring it back. You'd need a Trump-like figure to be President for the next 30 years for any of these changes to just seem like the way things have always been.
If I WERE King Ike II, I could get a whole lot done! It's easy to solve problems if you remove all sentimentality.
Illegal immigration problem? Ok, any illegal captured on American soil will be executed the same day, like a spy in wartime. No trials, nothing. You've got a six month grace period to get out of here. Illegal immigration problem solved!!
Oh but you'll kill millions! cry the Wine Aunts. No, you wouldn't kill anybody, because nobody would stick around to find out. Well, probably a few examples would have to go so the rest saw you were serious, but whatever. Eggs and omelets and all that.
Maybe I'd call myself King Vanilla Ice: "If you got a problem, yo, I'll solve it!" Or maybe King Vanilla Ike. Yeah, I like the sound of that.
Mod, yeah for sure I know this couldn't happen. And OF COURSE the Dems and GOPe would act in bad faith about all of it. And anyway, if Trump had killed all student loans, Biden would have brought it back right away. Even if Trump killed the Dept of Ed, Biden would bring it back. You'd need a Trump-like figure to be President for the next 30 years for any of these changes to just seem like the way things have always been.
If I WERE King Ike II, I could get a whole lot done! It's easy to solve problems if you remove all sentimentality.
Illegal immigration problem? Ok, any illegal captured on American soil will be executed the same day, like a spy in wartime. No trials, nothing. You've got a six month grace period to get out of here. Illegal immigration problem solved!!
Oh but you'll kill millions! cry the Wine Aunts. No, you wouldn't kill anybody, because nobody would stick around to find out. Well, probably a few examples would have to go so the rest saw you were serious, but whatever. Eggs and omelets and all that.
Maybe I'd call myself King Vanilla Ice: "If you got a problem, yo, I'll solve it!" Or maybe King Vanilla Ike. Yeah, I like the sound of that.
Moderator
Thursday - March 4th 2021 12:00PM MST
PS: BTW, Peter, that was not to knock the plan were the rest of the steps actually feasible. You would have to be President, no King Ike II, telling the press "I may get the Congress involved for some advice, if I feel like it."
Moderator
Thursday - March 4th 2021 11:58AM MST
PS: Peter, let me address your solution: I'm in favor of everything but (1).
(5) would be the easiest, Ronald Reagan promised (4) in 1980! Even just a few years into the life of this department, and as good a politician as Reagan was, it didn't happen.
(3) and (6) would be simply effects of the policy, happening naturally, and would please me to no end.
On (2), well banks can loan money to whomever they want, but without US Feral Gov. involvement, in terms of guarantees, bail-outs, or whatever, this huge bubble would be burst just the same. Ending the Dept. of Ed and those loan guarantees would do the trick.
Speaking of Reagan a minute ago, I'll give me 1st objection to your (1), Peter. Go back to his biggest regret - -
https://www.peakstupidity.com/index.php?post=288
"1986 Illegal Amnesty - Ronald Reagan's regrets."
It'd be the same thing. (1) would happen. (2) through (6)? Nope, "so sorry. You fucked up - you trusted us."
2nd reason for me is that the moral hazard would have ingrained itself into lots of young people: "Responsibility is stupid." My solution is kind of tepid, but I think it's the only way - see my link to Part 3. (This is all assuming the country will go on just fine, so it's all theoretical IMO anyway.)
(5) would be the easiest, Ronald Reagan promised (4) in 1980! Even just a few years into the life of this department, and as good a politician as Reagan was, it didn't happen.
(3) and (6) would be simply effects of the policy, happening naturally, and would please me to no end.
On (2), well banks can loan money to whomever they want, but without US Feral Gov. involvement, in terms of guarantees, bail-outs, or whatever, this huge bubble would be burst just the same. Ending the Dept. of Ed and those loan guarantees would do the trick.
Speaking of Reagan a minute ago, I'll give me 1st objection to your (1), Peter. Go back to his biggest regret - -
https://www.peakstupidity.com/index.php?post=288
"1986 Illegal Amnesty - Ronald Reagan's regrets."
It'd be the same thing. (1) would happen. (2) through (6)? Nope, "so sorry. You fucked up - you trusted us."
2nd reason for me is that the moral hazard would have ingrained itself into lots of young people: "Responsibility is stupid." My solution is kind of tepid, but I think it's the only way - see my link to Part 3. (This is all assuming the country will go on just fine, so it's all theoretical IMO anyway.)
PeterIke
Thursday - March 4th 2021 11:01AM MST
PS
This is a big sore spot for me. I think Trump missed his chance to implement the PeterIke Plan for Student Loans. Here's how my (total fantasy) plan would have worked.
1. Trump forgives all -- ALL -- student loans. Why not, it's just more fake money. This could have helped him with the college-ejumacated class, which was not inclined to vote for him. (Of course, ultimately it didn't matter since the election was stolen.)
2. To "pay" for this, all student loans in future would be cancelled. No more Fed loans or college aid OF ANY KIND going forward.
3. College enrollment would drop precipitously (good!) as no more loans means no more useless degrees. Colleges would need to cut tuition drastically, thereby putting severe strain on all the bullshit degrees, diversity counselors, etc.
4. Since we're not processing college loans, we no longer need a Department of Ejumacation. The entire department is shut down -- a MASSIVE win for America, as they do zero good and monumental amounts of bad. And it sets a precedent: yes, you CAN actually close down an entire useless department. Housing is next!
5. At the same time, all student visas are cancelled. All of them. Poof go another 400,000 or so college students and we stop educating our enemies.
6. Colleges and universities collapse with both these funding sources removed. Dozens, even hundreds, are forced to shut their door. The Left loses one of its biggest incubators. Thousands of Leftist agitators are now serving coffees at Starbucks where their Communism has no impact.
It's win-win-win all around. The perfect plan!
This is a big sore spot for me. I think Trump missed his chance to implement the PeterIke Plan for Student Loans. Here's how my (total fantasy) plan would have worked.
1. Trump forgives all -- ALL -- student loans. Why not, it's just more fake money. This could have helped him with the college-ejumacated class, which was not inclined to vote for him. (Of course, ultimately it didn't matter since the election was stolen.)
2. To "pay" for this, all student loans in future would be cancelled. No more Fed loans or college aid OF ANY KIND going forward.
3. College enrollment would drop precipitously (good!) as no more loans means no more useless degrees. Colleges would need to cut tuition drastically, thereby putting severe strain on all the bullshit degrees, diversity counselors, etc.
4. Since we're not processing college loans, we no longer need a Department of Ejumacation. The entire department is shut down -- a MASSIVE win for America, as they do zero good and monumental amounts of bad. And it sets a precedent: yes, you CAN actually close down an entire useless department. Housing is next!
5. At the same time, all student visas are cancelled. All of them. Poof go another 400,000 or so college students and we stop educating our enemies.
6. Colleges and universities collapse with both these funding sources removed. Dozens, even hundreds, are forced to shut their door. The Left loses one of its biggest incubators. Thousands of Leftist agitators are now serving coffees at Starbucks where their Communism has no impact.
It's win-win-win all around. The perfect plan!
Moderator
Thursday - March 4th 2021 7:14AM MST
PS: "... the Student Loan problem is an effect and not the cause." I'm not sure which way you meant it, Mr. Hail, because I can't tell if this phrase is in reference to how "A lot of people, many of them well intentioned" think or your position.
To me the fact that student loans are big money now, commensurate with huge tuition bills that any State U. will charge now, is an EFFECT of the guaranteeing of these loans by the US Feral Gov't a few decades ago. U's know that they can just raise the tuition sky high, as the banks will give an Art History major* money to cover everything. Why will they do that? It's because they have nothing at all to lose, and will gain the origination fee and some interest.
In the days before these guarantees, the Loan Officer at the bank would have smiled and said nicely "maybe we can get you $200 a semester, if you have very good credit. If you end up in the electrical engineering program, come back in, and we'll talk."
Nobody's got a gun to these kids and/or their parent's heads either, though. The irresponsibility of it is the CAUSE of their later problems, when they are 25 year-olds with no house, making $20,000 a year, but with a house payment-sized bill each month. "Save me, Zhou! Save me!"
Or should I take it you mean that the economy is in such bad shape for b1990s kids that that their taking these big loans for a piece of paper is an EFFECT of their situation?
I look forward to hearing back, Mr. Hail. BTW, I'll put a quick post up in a couple of minutes linking to your newest post.
* no big sleight there either, it's just a fine major if you don't expect that degree to get you a job that can easily pay back $600 monthly for 20 years!
To me the fact that student loans are big money now, commensurate with huge tuition bills that any State U. will charge now, is an EFFECT of the guaranteeing of these loans by the US Feral Gov't a few decades ago. U's know that they can just raise the tuition sky high, as the banks will give an Art History major* money to cover everything. Why will they do that? It's because they have nothing at all to lose, and will gain the origination fee and some interest.
In the days before these guarantees, the Loan Officer at the bank would have smiled and said nicely "maybe we can get you $200 a semester, if you have very good credit. If you end up in the electrical engineering program, come back in, and we'll talk."
Nobody's got a gun to these kids and/or their parent's heads either, though. The irresponsibility of it is the CAUSE of their later problems, when they are 25 year-olds with no house, making $20,000 a year, but with a house payment-sized bill each month. "Save me, Zhou! Save me!"
Or should I take it you mean that the economy is in such bad shape for b1990s kids that that their taking these big loans for a piece of paper is an EFFECT of their situation?
I look forward to hearing back, Mr. Hail. BTW, I'll put a quick post up in a couple of minutes linking to your newest post.
* no big sleight there either, it's just a fine major if you don't expect that degree to get you a job that can easily pay back $600 monthly for 20 years!
The Alarmist
Thursday - March 4th 2021 6:30AM MST
PS
The HR geniuses in one of my US portfolio companies seriously proposed paying the student loans of new recruits to attract them to the company. My comment to that was, “Do we really want to attract people who can’t manage their own affairs?”
Then again, I worked my way through all my schooling, so of course I have Neanderthal thinking.
At this point, I think companies should avoid most college grads for any non-technical position (and even there many should be avoided) and simply grab promising youth from high schools and train them on the job.
The HR geniuses in one of my US portfolio companies seriously proposed paying the student loans of new recruits to attract them to the company. My comment to that was, “Do we really want to attract people who can’t manage their own affairs?”
Then again, I worked my way through all my schooling, so of course I have Neanderthal thinking.
At this point, I think companies should avoid most college grads for any non-technical position (and even there many should be avoided) and simply grab promising youth from high schools and train them on the job.
dieter kief
Thursday - March 4th 2021 1:45AM MST
PS
Mr. Hail, what is different if one look at the Student Loan problem as an effect?
Mr. Hail, what is different if one look at the Student Loan problem as an effect?
Hail
Wednesday - March 3rd 2021 10:16PM MST
PS
A recent presentation of the Student Loan Problem:
https://taibbi.substack.com/p/student-loan-horror-when-you-think
_____________
Student Loan Horror: When You Think You Qualify For Debt Relief, Check Again. And Again
A pair of married science teachers were sure they qualified for student debt forgiveness. They discovered what many borrowers learned in the 2010s: not qualifying for aid is the norm [...]
_____________
Most of Taibbi's own commenters said this pair is totally irresponsible, unsympathetic, it's their own fault, the implied solution of "extending a government helping hand" not a good idea.
This portrait by Matt Taibi is also not about young people, as the two people being profiled are afaict around age fifty. They got into the student loan trap together, and have bungled their way through it together. They remain married and have two children. Given that the Student Loan problem is clearly a part of the "affordable family formation" problem, this case is not representative. (I imagine the Student Loan problem alone is responsible for some dysgenic fertility -- drop in smart men's and women's number of children born, overall and relative to others.)
A recent presentation of the Student Loan Problem:
https://taibbi.substack.com/p/student-loan-horror-when-you-think
_____________
Student Loan Horror: When You Think You Qualify For Debt Relief, Check Again. And Again
A pair of married science teachers were sure they qualified for student debt forgiveness. They discovered what many borrowers learned in the 2010s: not qualifying for aid is the norm [...]
_____________
Most of Taibbi's own commenters said this pair is totally irresponsible, unsympathetic, it's their own fault, the implied solution of "extending a government helping hand" not a good idea.
This portrait by Matt Taibi is also not about young people, as the two people being profiled are afaict around age fifty. They got into the student loan trap together, and have bungled their way through it together. They remain married and have two children. Given that the Student Loan problem is clearly a part of the "affordable family formation" problem, this case is not representative. (I imagine the Student Loan problem alone is responsible for some dysgenic fertility -- drop in smart men's and women's number of children born, overall and relative to others.)
Hail
Wednesday - March 3rd 2021 10:02PM MST
PS
There is no way around it that this Student Debt problem is a big one, on multiple levels and also not a problem somehow in isolation as some seem want to treat it and apply magic-bullet solutions.
It's tied deeply to the civilizational problem, IMO being much more "effect" than "cause" of why b.1980s are in worse shape than b.1970s who in turn are in worse shape than b.1960s people and especially b.1940s/b.1950s people, at similar times in their lives on general civilizational-health metrics.
As for the b.1990s people now in their twenties, it's not looking any better for them than for the b.1980s, and, as we stand today, the b.2000s cohort is still caught in the same dilemma, with b.1998 to b.2002 or so being among the biggest age-cohort losers of the 12-months-so-far of Corona-Disruptions (pay full tuition to study all day in front of a computer screen in your room at your parents' house; get expelled for daring to meet other students in person). People tend to do what their told and what their culture expects of them to lead meaningful lives.
A lot of people, many of them well intentioned, seem to flip this around cause and effect; the Student Loan problem is an effect and not the cause.
There is no way around it that this Student Debt problem is a big one, on multiple levels and also not a problem somehow in isolation as some seem want to treat it and apply magic-bullet solutions.
It's tied deeply to the civilizational problem, IMO being much more "effect" than "cause" of why b.1980s are in worse shape than b.1970s who in turn are in worse shape than b.1960s people and especially b.1940s/b.1950s people, at similar times in their lives on general civilizational-health metrics.
As for the b.1990s people now in their twenties, it's not looking any better for them than for the b.1980s, and, as we stand today, the b.2000s cohort is still caught in the same dilemma, with b.1998 to b.2002 or so being among the biggest age-cohort losers of the 12-months-so-far of Corona-Disruptions (pay full tuition to study all day in front of a computer screen in your room at your parents' house; get expelled for daring to meet other students in person). People tend to do what their told and what their culture expects of them to lead meaningful lives.
A lot of people, many of them well intentioned, seem to flip this around cause and effect; the Student Loan problem is an effect and not the cause.
Does the student debt really matter? If the people owing the money wait a few years, there won't really be much to pay back given the impending hyperinflation.