College Marauders – Student loan debt inches to $900 billion when only in 2000 it was at $200 billion – Most expensive colleges in country charging nearly $60,000 per year in tuition.
College education is a dream for many Americans. What the current recession is showing us is that having a college degree is a substantial benefit in getting ahead as long as you don’t put yourself into the abyss of student loan debt. This has been magnified by the fact that low skilled work and blue collar jobs are either outsourced or simply do not pay a competitive wage to keep up with the current cost of living. Average Americans do not have a 4-year college degree because if we look at the data 1 out of 4 adults in the United States has a bachelor’s degree or higher. Given that many of the sectors with future job growth including engineering and healthcare require advanced degrees it is crucial to have the foundational background to be competitive in these sectors. However like most anything in life, not all college degrees are created equal and chiseled from the same stone and with student loans people are able to do irreparable damage by chasing a degree that has little return on investment.
Financial dismantling of the American middle class in 8 charts – Peak debt, credit card addiction withdrawal, banks hoarding cash, financial sector dominance in pay, Federal debt will never be paid off, and struggles of the middle class.
The American economy runs on high octane debt. Debt has been welcomed by many with open arms and things seemed to be going well until people realized they actually had to pay the debt back. Average Americans trying to keep up with the picket white fence image of Leave it to Beaver were largely relying on debt to keep up with this lifestyle that was unsustainable with current incomes. Paradigm shifts in economies the size of the United States happen gradually over time. They occur slowly and systematically with the patience of a person watching grass grow. The Federal Reserve has made a conscious effort to bailout the banks and use the crisis as an excuse to lower the standard of living of most Americans to pay for the bailouts. Federal debt is so large that only someone with blind optimism would have any hope that it would ever be paid off. When an average person cannot pay their mortgage they lose their home in foreclosure. If someone can’t pay their car they get it repossessed. When banks need bailouts they simply print away and devalue the currency of the domestic country shifting the burden to society. Have we in the United States reached a peak debt scenario? Is the Fed willing to sacrifice the middle class to keep the banking system intact? Let us look at 8 charts showing shifts in our economy that put the middle class at risk.
Phoenix real estate breaks a record with 50 percent of all home sales coming from all cash investors. Locals barely can buy with FHA insured loans. Can a desert market dependent on cheap oil and survive in the $100+ a barrel world?
The Phoenix real estate market is a fascinating case examination of an area guided by FHA loans for first time buyers and all cash investors purchasing 50 percent of properties. In January of 2011, the latest month of stunning data, 1 out of every 2 homes sold went to an all cash buyer. We are seeing many investors moving off the picket fence and purchasing homes in these desert cities. Cash is being put into action. The price has fallen dramatically and home prices are cheaper today than they were over a decade ago. But is this a good deal? Are eager investors making a good move out in Phoenix? The median price for a home sale was $119,000 which is down y-o-y by 9 percent and the median condo price was $72,000 down 24 percent y-o-y. When we look at the statistics we see that many eager investors are moving cash off the sideline and purchasing homes with all cash.
The big financial lie – How growing income inequality, too big to fail banks, and stock market delusion swindled the American public and dissolved the middle class.
The American banking system has spread systemic risk all across the economy with laser point precision but very few are even aware of this grim reality. It would seem that only those who understand the system from the cavernous inside and have little to lose can actually speak out against the system as they see it. Bernard Madoff recently called the United States Government a Ponzi scheme. As it turns out many of the biggest banks in this country knew something was suspect with Madoff’s incredible gains but wanted a piece of the action instead of exercising a fiduciary responsibility. Madoff is guilty of swindling investors, many who were greedy and didn’t even bother to ask how Madoff was able to generate 20 percent year over year returns. Wall Street and the investment banks however are guilty of a larger crime by defrauding the wealth of working and middle class Americans. The fact that three years into the crisis and no serious reform has taken place causes us to pause in baffling amazement at the ability to ignore the obvious financial errors. Our banking system is being held up by blind faith while the real wealth of the country is siphoned off to the top.