A College Siren Call – Going to a for-profit college today is like purchasing a home with a subprime loan at the peak of the housing market – The massive student debt bubble expanded from $200 billion to over $960 billion from 2000 to 2011 with a big push from for-profits at a time when incomes contracted.
The college debt problem is boiling over and spilling hot water onto an already weak economy. This is no longer a petty niche issue when we are quickly reaching $1 trillion in outstanding student loan debt. What is more problematic is the acceleration in tuition over the last decade. Most of the combined data is looking back deep into the past when most of the problem has hit in the last decade. How bad is it? In 2000 total student debt was roughly $200 billion. Today it is above $960 billion. So in a matter of ten years the amount of student debt has gone up over 380% while household income has actually fallen. The players in the student debt market are largely connected to the big financial institutions and the government is willing to grease these juicy wheels just like it did for the mortgage debt crisis. The integration between government and the big banks is like a marriage made in graft heaven.
When the clock strikes 12 – the midnight economy of food assistance. Millions of people shop on the first of the month because electronic food assistance cards are credited. The lost wages of a decade and a Fed determined to bailout the world.
We have a serious economic crisis on our hands and the media simply fails to acknowledge it. You might be waking up to the first of the month thinking the wheels of the economy are fine. Yet silently, millions of Americans drive into mega supercenters like Wal-Mart only to wait for their monthly allotments of food assistance so they can pay for basic groceries. This trend is so prevalent that certain Wal-Mart centers are fully staffed at midnight since a large part of our society is waiting for that first day of the month to purchase food for their family. 46 million Americans are now receiving food assistance. How is this issue swept under the rug? We also have many more Americans losing their unemployment benefits because of the long-term employment issues. The statistics show this number decreasing simply because people are falling off of their maximum number of months that they can receive benefits. Sadly, the country is entering into a low wage environment where the working and middle class have limited employment security yet financial institutions have all the protection from the Federal Reserve even when they operate in a system of graft and irresponsibility.
The student loan racket – For-profit enrollment growth surged by 225 percent in last decade. For-profits live off the 85 percent of revenues they receive from the government and filter out to their Wall Street owners.
The loud commotion you hear rattling the global economy is the massive debt bubble imploding. A few notable economists have stated that too much debt is reached simply when the public acknowledges that there is too much debt. To this point the public is now waking up to the reality that too much debt is being taken on for higher education. Where there is money to be made you now have Wall Street and the government walking hand and hand smiling to fleece the American student without producing any measurable increase in value. With a web of connections and political pay for play we now have a giant bubble that is causing financially disastrous results for many young Americans walking out with diploma in hand and a massive albatross of debt securely wrapped around their bare wallets. With youth unemployment rivaling those of third world nations we are starting to see cracks in the current system. It seems that the $1 trillion mark with student debt might have been a tipping point.
Meet the New Recession, same as the Old Recession – Financial sector devouring a disproportionate amount of revenues. Share of wealth to financial sector at record levels.
The middle class is being squeezed like a ripe tomato out of existence in the United States and the media is largely fixated on trivial nonsense, political theatre, and flashy car advertisements to keep people numb from the grim reality. The financial sector has become a large drag on the overall economy instead of serving as the lubricant of real business growth. A similar thing happened during the years prior to the Great Depression. A massive amount of wealth was pushed to a segment of society based on gambling and large bets. Making money on doing no actual work or really producing anything of real substance. These massive misallocations of resources cause bubbles and pop with gusto. The big difference this time, and this is even more troubling, is that nothing has been changed to fix the system that led us into this precarious dark hole of financial graft. Our politicians work for the large financial institutions and most of the public is starting to realize what is good for banks is not necessarily what is good for the middle class.