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Outlooks, Education, and Income

From a recent item at Pew Research via this Wall Street Journal story today come the two related charts below that go a long way in explaining the rise of presidential candidate Donald Trump who, not long ago, proclaimed “I love the poorly educated”.

One would think that if you factor in the gargantuan student loan debt that now comes along with many of those college degrees and income gains shown above for the millennial set, those blue and gray curves would adjusted downward, probably by a lot.

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Much ado in the financial media this morning about yet another warning from the Bank for International Settlements about the current state of affairs in the global financial system as it relates to debt levels that now exceed the 2007 highs, negative interest rates, and faltering confidence in central banks who seem increasingly befuddled and desperate.

The tone appears to have been lost on whoever penned the outlier headline below.

The Bloomberg article is about as positive as the headline, so this can’t be blamed on whoever’s responsible for ensuring that headlines are click-worthy to readers.

Maybe it’s not such a bad thing to look on the bright side of things now and then, though this may not be a particularly good opportunity to do so…

For someone who will turn 90 this Sunday, he seems pretty sharp…

The Fed Chairman they once called Maestro thinks that negative interest rates “warp” investor behavior (something that you just don’t say when you’re sitting at the head of the big table at the Eccles Building) and that he hasn’t been optimistic in “quite a while”.

Millennials on Debt: “Me No Likey”

A new report from the New York Fed shows a disturbing trend (if you’re a bank, that is) about consumer credit as the borrow-and-spend baby-boomer generation heads off into the sunset with a chastened millennial generation not able/willing to take up the slack.

Here’s the key take-away:

We find that aggregate debt balances held by younger borrowers have declined modestly from 2003 to 2015, with a debt portfolio reallocation away from credit card, auto, and mortgage debt, toward student debt. Debt held by borrowers between the ages of 50 and 80, however, increased by roughly 60 percent over the same time period.

It appears that getting saddled with monstrous student loan debt might be good for tenured professors and college administrators, but bad for an economy that is based largely on buying things you don’t need with money you don’t have.

China’s Latest Lending Orgy

Well, you can’t fault China for not trying to resuscitate their ailing economy and flagging stock market via yet another reckless expansion of credit and debt as detailed in this Bloomberg report that includes the video below with some startling long-term data.

As I recall from my brief foray into management more than 20 years ago (one that, it turned out, I was particularly ill-suited for but was fortunate enough to learn this early in my career so I could move on), you never want to be accused of doing nothing when things are going badly and the Chinese are certainly not doing that.

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