2012 March 05 | timiacono.com

More Amazing Student Loan Statistics

The cost of a college education has been in the news a lot lately, what with Fed Chief Ben Bernanke telling a Congressional committee last week that his son is about to graduate from medical school with $400,000 in student loan debt as recounted in this Huffington Post story the other day and with Catherine Rampell documenting the dramatic rise in the cost of attending state colleges in this New York Times report.

Another data point comes today in this item at Sober Look in which the dramatic rise in government involvement in student loans is made clear in the graphic below:

I’ve known that rising student loan debt has been doing a pretty good job in recent years of offsetting falling credit card debt in the Fed’s monthly report on consumer credit, but I didn’t know that the gubment was on the hook for so much of it, though, with all the other money that has been gushing out of the nation’s capital since the Great Recession started in 2008, it really shouldn’t be too surprising.

Of course, it would be nice if a college degree was worth what it used to be in the workplace. It used to be that for little or no money you could go out and get an engineering degree at just about any state college and you’d be rewarded with a pretty decent standard of living (I should know, I did it). But, that doesn’t seem quite as easy any more.

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David Stockman: “The Fed is a Patsy”

David Stockman, White House budget director under Ronald Reagan and erstwhile critic of all things financial, is not at all optimistic about the U.S. economy and has a rather dim view of the nation’s central bank, going on at length on these and other topics in this widely distributed interview with the Associated Press.

Q: But the unemployment rate is falling and companies in the Standard & Poor’s 500 are making more money than ever.

A: That’s very short-term. Look at the data that really counts. The 131.7 million (jobs in November) was first achieved in February 2000. That number has gone nowhere for 12 years.

Q: What will 10-year Treasurys yield in a year or five years?

A: I have no guess, but I do know where it is now (a yield of about 2%) is totally artificial. It’s the result of massive purchases by not only the Fed but all of the other central banks of the world.

Q: What’s wrong with that?

A: It doesn’t come out of savings. It’s made up money. It’s printing press money. When the Fed buys $5 billion worth of bonds this morning, which it’s doing periodically, it simply deposits $5 billion in the bank accounts of the eight dealers they buy the bonds from.

Q: And what are the consequences of that?

A: The consequences are horrendous. If you could make the world rich by having all the central banks print unlimited money, then we have been making a mistake for the last several thousand years of human history.

Q: How does it end?

A: At some point confidence is lost, and people don’t want to own the (Treasury) paper. I mean why in the world, when the inflation rate has been 2.5% for the last 15 years, would you want to own a five-year note today at 80 basis points (0.8%)?

If the central banks ever stop buying, or actually begin to reduce their totally bloated, abnormal, freakishly large balance sheets, all of these speculators are going to sell their bonds in a heartbeat.

That’s what happened in Greece.

Here’s the heart of the matter. The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today — utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn’t have half, you wouldn’t have 95%, of the speculative positions today.

I guess it shouldn’t come as too big of a surprise to learn that Stockman owns no stocks at present – he says his assets are mostly in cash with a smaller portion held in gold.

Warren Buffett Priced in Gold

Via this item at the azizanomics blog the other day comes another way to look at Warren Buffett’s recent comments about “valueless” gold in the depiction of Berkshire Hathaway stock priced in the yellow metal.

I’d have to agree with the chart’s creator John Aziz when he notes:

Warren Buffett had a great ride: he grew his wealth and businesses in an era of unprecedented growth powered by OPEC oil, and later by Chinese industrialism. That era — the era of the American free lunch — is coming to an end. His insights are applicable to that era. Today is a different world.

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Monday Morning Links

Fed Takes a Break to Weigh Outlook – WSJ($)
Bernanke Leaks, Spoils the Punch – Bruce Krasting
China lowers growth target half a point to 7.5% – MarketWatch
China’s Services Index Falls in Sign Economy Weakening – Bloomberg
Gas prices climb yet again on Sunday, topping $3.76 – CNN/Money
Tactics and Strategy at the Strait of Hormuz – The Oil Drum
Oil could soar to $440 a barrel if Strait of Hormuz closed – Tehran Times
Expect a US Price Shock as Black Swans Come Home to Roost – Chris Martenson
China hedging its bets on U.S. government debt, data show – LA Times
Warning: A New Who’s Who of Awful Times to Invest – Hussman Funds
Walt Whitman, The First Artist of Finance – Shiller, Bloomberg
The rapidly growing student loan problem – Sober Look
Bank of America In Trouble? – Taibblog

Oil down to $106 on lower China growth target – AP
Gold slips as euro zone worries lift dollar – Reuters
Stocks Cheaper Than Any U.S. Peak in 23 Years – Bloomberg
Investor Sentiment: Get a Parachute? – Zero Hedge
Stocks, the little engine that could – Reuters
Gold Far From Bubble Phase: Marc Faber – The Gold Report
Gold Breakout Round the Corner, Price Could Hit $3,000: Dollar Doomsayers – IBT
Barclays: Physical gold buying picks up after Wednesday sell off – Commodity Online
David Rosenberg: “The Best Currency May Be Physical Gold” – GoldSilver
Wednesday’s Intervention – Too Big To Spoil? – COMEX we hava a problem
Where is Greece’s gold? – GoldMoney

States of Depression – Krugman, NY Times
New Report: Seniors Can’t Make Ends Meet – WSJ
Disingenuous Recession Explanations from ECRI – Mish
Why Tuition Has Skyrocketed at State Schools – NY Times
The Changing Multiplier Since 1925… – GRWTIH
GLOBAL ECONOMY WEEKAHEAD-The good news behind oil prices – Reuters
What is the ECB endgame? – Marginal Revolution
Merkel Sees Euros Minted From Marks in Political Trial of German Integrity – Bloomberg
Chinese Congress Opens With Upbeat Assessments and Eyes on the Top – NY Times
China military spending to top $100 billion in 2012, alarming neighbors – Washington Post
Why ZIRP Was Inevitable and Why It May Be With Us a Long Time – Daily Capitalist
The Fed and The Power To Redirect and Redistribute Wealth – Forbes
The Central Banks’ Assault On Savers – Zero Hedge

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