Financial News

[Balta1701]

I've advocated a one year freeze on obligations to pay back student loan debt held by the federal gov't. Think of all that extra capital that people would have to spend. Spending=better business performance=job hiring=economy back on track.

 

Instead, we'll waste billions on GM to save "300 million" jobs.

That'd be a very reasonable and effective method of stimulus that I'd strongly support right now. Targeted to the perfect group; people who are likely to spend the money. It'd be fairly small unfortunately, because the total outstanding amount of student loans are $556 billion, which means that even a full year delay only gets ~$10s of billions of stimulus dollars in that year. It'd be in the right direction, but it's still less in value than increasing unemployment benefits would be.

 

Keeping GM and Chrysler afloat has been an incredibly effective method of stimulus as well.

[Jenksismyhero]

What would stopping those payments do to the deficit, and how much more would we have to cut social services to finance it?

 

Yeah I was trying to look that up to see how much the gov't collects. It can't be THAT much though, considering their loan practices (being extremely lenient on payment). Plus, they make their money over the 10, 20, or 30 year life of the loan. The loss from one year could be spread out.

[Jenksismyhero]

That'd be a very reasonable and effective method of stimulus that I'd strongly support right now. Targeted to the perfect group; people who are likely to spend the money. It'd be fairly small unfortunately, because the total outstanding amount of student loans are $556 billion, which means that even a full year delay only gets ~$10s of billions of stimulus dollars in that year. It'd be in the right direction, but it's still less in value than increasing unemployment benefits would be.

 

Keeping GM and Chrysler afloat has been an incredibly effective method of stimulus as well.

 

I'd much rather give millions of people an extra few hundred (or more in many cases) bucks a month for a year than giving a s***ty, failing company 14 billion to give to their executives.

 

And keeping GM and Chrysler afloat. GMAFB. Fiat kept Chrysler afloat, not the government.

[StrangeSox]

Yeah I was trying to look that up to see how much the gov't collects. It can't be THAT much though, considering their loan practices (being extremely lenient on payment). Plus, they make their money over the 10, 20, or 30 year life of the loan. The loss from one year could be spread out.

 

Yeah but the smaller the budget impact the smaller the stimulus. Not saying it couldn't be a highly effective program, just that it wouldn't have that large of an impact.

[Balta1701]

I'd much rather give millions of people an extra few hundred (or more in many cases) bucks a month for a year than giving a s***ty, failing company 14 billion to give to their executives.

 

And keeping GM and Chrysler afloat. GMAFB. Fiat kept Chrysler afloat, not the government.

$14 billion to keep a few hundred thousand people employed for a period of 2+ years is a relative bargain...and it becomes even better if you count all of the auto parts suppliers.

[Jenksismyhero]

$14 billion to keep a few hundred thousand people employed for a period of 2+ years is a relative bargain...and it becomes even better if you count all of the auto parts suppliers.

 

You don't think there would have been a buyer out there (you know, like Fiat)? You don't think an actual bankruptcy, without the promise that the US government would step in, would have been MORE beneficial to GM during it's reorganization? "Dear X creditor, either you amend our deal or we go bankrupt and you get zero." is a better negotiating position than "dear X creditor, we're going through bankruptcy, but we have the US gov't telling everyone there's absolutely no way we'll go out of business. So, uh...care to change our deal?" I'm guessing they got some REAL favorable terms as part of their restructuring using that line.

 

Edit: And i'm not disputing there would have been SOME job losses as a result of not bailing them out. Hell, there were losses WITH the bailout. But what makes the auto industry worker so much more important than anyone else that lost their job as a result of their company going out of business the last few years? Oh right, auto workers overwhelmingly vote D.

Edited June 3, 2011 by Jenksismybitch

[Balta1701]

You don't think there would have been a buyer out there (you know, like Fiat)? You don't think an actual bankruptcy, without the promise that the US government would step in, would have been MORE beneficial to GM during it's reorganization? "Dear X creditor, either you amend our deal or we go bankrupt and you get zero." is a better negotiating position than "dear X creditor, we're going through bankruptcy, but we have the US gov't telling everyone there's absolutely no way we'll go out of business. So, uh...care to change our deal?" I'm guessing they got some REAL favorable terms as part of their restructuring using that line.

I think it's pretty clear that if Fiat wanted Chrysler, they had a period of months/years where the company was teetering and they didn't get it done.

 

The only reason Fiat took on the lump that was Chrysler was that they got favorable terms. Otherwise, yes, the company was gone. And even non-bailed-out Ford still said that once one fell, all of them fell.

[bmags]

and bankers overwhelmingly vote R. Who cares.

[Jenksismyhero]

I think it's pretty clear that if Fiat wanted Chrysler, they had a period of months/years where the company was teetering and they didn't get it done.

 

The only reason Fiat took on the lump that was Chrysler was that they got favorable terms. Otherwise, yes, the company was gone. And even non-bailed-out Ford still said that once one fell, all of them fell.

 

They were buying a huge stake in the company (now 70% because of the options it got) regardless of whether the US government propped them up for a matter of months. Chrysler would have gone to bankruptcy and tried to find a buyer. Kinda like what happened anyway.

 

 

[Jenksismyhero]

and bankers overwhelmingly vote R. Who cares.

 

Just pointing out that there was a political motivation there.

[Balta1701]

They were buying a huge stake in the company (now 70% because of the options it got) regardless of whether the US government propped them up for a matter of months. Chrysler would have gone to bankruptcy and tried to find a buyer. Kinda like what happened anyway.

Except that Chrysler would have closed its doors completely and had its assets sold off by a bankruptcy court with everyone in the auto industry out of work.

 

It's pretty darn clear both at the time and in hindsight that Chapter 13 was the only route that any of them would have gone. No one was paying to keep a bankrupt auto manufacturer running, especially considering that sales would have essentially ceased for years.

[Chisoxfn]

God yes.

 

But that would have had the government "Paying your neighbors' mortgage" though. And we can't do that, people who screwed up have to suffer.

Let me give you an example of one of my dads clients:

 

Client bought a house for 850K. Said house today is worth probably between $400 to $450K. Client reached out to the bank at a time the house was worth 550 to 600K (owing 800K) and requested on 4 separate occasions that the bank negotiate a deal with him (He would have paid $100K cash for them to reduce the loan to between 500K and 550K). That would have been money the bank got.

 

Since the bank said no, which was now 3 years ago, they have not received anything. No mortgage payment, no nothing. My dad’s client has since saved up a large sum of money (to buy another place in cash, regardless of his s*** credit). So when the bank eventually takes this thing over, they are going to end up netting, around 400K (give or take 15K, after you factor in the commission and costs of escrow, etc).

 

Seems like a huge loss compared to the alternative.

 

Another crazy statistic, in California, ~40% of homes are underwater, Las Vegas, Florida and Arizona are all still above 50% or so based upon a study released this month. This crap isn’t ending yet. I don’t think anyone realized how bad things were going to get before they get better. The key is, affordability is still ultimately not there in many areas and until the prices correct to that price point, you are going to continue to have too much negative pressure on pricing.

 

[StrangeSox]

A look at Groupon's finances

 

http://thinkprogress.org/yglesias/2011/06/...upon-economics/

 

 

[Chisoxfn]

Student Loan debt is 850B and growing. It actually exceeds credit card debt in this country. And from 10 years ago, the average student loan debt in this country has increased by ~54%. Pretty insane given how much more we are actually spending as a country.

 

It is actually quite mindboggling to me that debt has increased that much and tuition costs have increased as much as they have as well (and that isn't a coincidence, imo), all in a short 10 year span. Makes you wonder what the f*** we spend our money on, given gov spending has done nothing but go through the roof.

[Steve9347]

Student Loan debt is 850B and growing. It actually exceeds credit card debt in this country. And from 10 years ago, the average student loan debt in this country has increased by ~54%. Pretty insane given how much more we are actually spending as a country.

 

It is actually quite mindboggling to me that debt has increased that much and tuition costs have increased as much as they have as well (and that isn't a coincidence, imo), all in a short 10 year span. Makes you wonder what the f*** we spend our money on, given gov spending has done nothing but go through the roof.

Strippers and blow for everyone!

[bigruss]

Student Loan debt is 850B and growing. It actually exceeds credit card debt in this country. And from 10 years ago, the average student loan debt in this country has increased by ~54%. Pretty insane given how much more we are actually spending as a country.

 

It is actually quite mindboggling to me that debt has increased that much and tuition costs have increased as much as they have as well (and that isn't a coincidence, imo), all in a short 10 year span. Makes you wonder what the f*** we spend our money on, given gov spending has done nothing but go through the roof.

I know a ton of middle class people with 10ish yr old kids freaking out about paying for their children's education. They are worried it's going to cost upwards of $50k a year just for instate tuition, which could easily be half or more of their salary. They want to provide more opportunities than they had and that just won't be the case if tuition keeps going up so much.

[StrangeSox]

Student Loan debt is 850B and growing. It actually exceeds credit card debt in this country. And from 10 years ago, the average student loan debt in this country has increased by ~54%. Pretty insane given how much more we are actually spending as a country.

 

It is actually quite mindboggling to me that debt has increased that much and tuition costs have increased as much as they have as well (and that isn't a coincidence, imo), all in a short 10 year span. Makes you wonder what the f*** we spend our money on, given gov spending has done nothing but go through the roof.

 

Would have been nice to do something about all of those predatory for-profit colleges that generate 90% of their revenues from federal loans that most students have no hope of paying back...

[Jenksismyhero]

Except that Chrysler would have closed its doors completely and had its assets sold off by a bankruptcy court with everyone in the auto industry out of work.

 

It's pretty darn clear both at the time and in hindsight that Chapter 13 was the only route that any of them would have gone. No one was paying to keep a bankrupt auto manufacturer running, especially considering that sales would have essentially ceased for years.

 

No. That's step 25 in bankruptcy. Do you know what the process is and what benefits GM would have gotten through real bankruptcy proceedings? GM would have continued to operate without having to pay any of its debts for a period of time. During that time they would have either worked out new (more profitable) deals with their creditors or they would have put the company (or pieces of the company) up for sale. IIRC, GM was incredibly profitable in other markets like China. They could have used that as part of their reorganization. Instead, they got free money from the gov't so that America could continue to have an "American Auto Industry," which is a bulls***, unrealistic notion anyway given how much all of the auto makers are global now.

 

Maybe the disconnect here is that you think i'm saying that the entities "GM" or "Chrysler" would have survived. Maybe not. But the people employed by them, and the massive amounts of assets located here in the states still held value and other companies would have purchased them, especially if they were offered a discount through bankruptcy negotiations. A company like Fiat is not going to send tens of thousands of italians over here to work in the plants. They're going to keep those assets here.

 

I would have let the companies fall, job losses or not. People lost their jobs all over the country, but two select industries got bailouts. It was bulls***. We just created the notion that some businesses are too big to fail and therefore they can continue to f*** up and operate their businesses negligently and the USoA will save them.

 

 

[Iwritecode]

I know a ton of middle class people with 10ish yr old kids freaking out about paying for their children's education. They are worried it's going to cost upwards of $50k a year just for instate tuition, which could easily be half or more of their salary. They want to provide more opportunities than they had and that just won't be the case if tuition keeps going up so much.

 

My kids are probably going to get the same thing my wife, the majority of my friends and I all got for college.

 

A pat on the back, a ride to the local community college and forms for all the loans and grants they can get.

 

[NorthSideSox72]

Chrysler was clearly the worse off company, compared to GM or Ford. I would have split the difference - bail out GM with an equity deal like we did (accompanied with a complete no-bonus clean-out of their CEO and a few other execs, which we really didn't do), and let Chrysler fend for themselves, sell pieces, or die off.

 

[Jenksismyhero]

Student Loan debt is 850B and growing. It actually exceeds credit card debt in this country. And from 10 years ago, the average student loan debt in this country has increased by ~54%. Pretty insane given how much more we are actually spending as a country.

 

It is actually quite mindboggling to me that debt has increased that much and tuition costs have increased as much as they have as well (and that isn't a coincidence, imo), all in a short 10 year span. Makes you wonder what the f*** we spend our money on, given gov spending has done nothing but go through the roof.

 

I just read something on wikipedia about federal student loans, and part of it was some study about how much school debt people should be paying in terms of percentage of their income per month. The max recommended was 8%. I laughed. My wife and I spend about 25%. And unless we want to pay back the loans for 30 years (and spend an extra 60-70k+ in interest to the government), we're stuck at that until our incomes go up.

 

Just another reason if you're middle class in this country you are f***ed.

[NorthSideSox72]

I just read something on wikipedia about federal student loans, and part of it was some study about how much school debt people should be paying in terms of percentage of their income per month. The max recommended was 8%. I laughed. My wife and I spend about 25%. And unless we want to pay back the loans for 30 years (and spend an extra 60-70k+ in interest to the government), we're stuck at that until our incomes go up.

 

Just another reason if you're middle class in this country you are f***ed.

My wife left grad school with about 40k total student loan debt from undergrad and grad. The loans then became active, and had an interest rate of like 3.5%. After 3 years paying on time, it dropped to 1.75%, and that's what its at now. Its basically free money on an inflation-based model. I would never want to pay that off early, unless I had no other debts to pay off (I wish). The payments are over, I think, 20 years. Really low payments.

 

What sort of interest are you folks paying on student loans?

 

[Jenksismyhero]

My wife left grad school with about 40k total student loan debt from undergrad and grad. The loans then became active, and had an interest rate of like 3.5%. After 3 years paying on time, it dropped to 1.75%, and that's what its at now. Its basically free money on an inflation-based model. I would never want to pay that off early, unless I had no other debts to pay off (I wish). The payments are over, I think, 20 years. Really low payments.

 

What sort of interest are you folks paying on student loans?

 

We went to school when all the rates started to rise unfortunately. Our undergrad (fortunately, or unfortunately, the smallest amount of debt) is at 2.75%. My law school is in two chunks - 4.75 and 6.75, and her grad loans are at 6.75. Obviously we brought this upon ourselves, as no one was forcing us to go to school. But still.

[Balta1701]

I would have let the companies fall, job losses or not. People lost their jobs all over the country, but two select industries got bailouts. It was bulls***. We just created the notion that some businesses are too big to fail and therefore they can continue to f*** up and operate their businesses negligently and the USoA will save them.

I'd say we'd already done a lot of that with the few thousand entities bailed out by the Federal Reserve.

[Jenksismyhero]

I'd say we'd already done a lot of that with the few thousand entities bailed out by the Federal Reserve.

 

i'd love to see the "government loss" column on that page.