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Archive for October 8th, 2013

Take a look at the tiny green dot in the picture below. It’s inside the yellow dot. It’s the little thing the big black arrow points to. Now take a look at the big red dot. The big red dot is the total amount of total student loan debt as of 2011. It’s a lot bigger now. It’s over a trillion dollars and growing. The green dot represents what that figure was back in 1990. The yellow dot represents what it was in 2000. So what happened for such monstrous debt to grow?

The answer: Wall Street investment banks discovered a way to redistribute income from the 99 percent to the 1 percent via student loans.

About thirty-three years ago, somebody on Wall Street discovered that student loans could be securitized. That’s a situation in which investment firms buy student loans, then issue bonds backed by the loans to wealthy investors. Most student loans are guaranteed by the federal government. So there’s virtually no risk to investors. Your student loan payments mostly go directly into the pockets of the 1 percent via these bonds.

The Wall Street business strategy on this matter was simple: Push the federal government to limit federal grants to college students, and expand the student loan program. That’s precisely what they did thanks to President Ronald Reagan, as well as Republicans and Democrats of both houses of congress. The result is that you pay more for your college education, and your payments go into the pockets of wealthy investors. This scam is also why interest rates on student loans were allowed to double from 3.4 to 6.8 percent earlier this year. It increased the return on investment for rich investors while doubling the burden on the 99 percent who take out new loans to finance what is called the American dream, but it’s really becoming the American nightmare. This is rightly called income redistribution.

The fact that there are any outstanding student loans at all is another scandal because presidents, senators, congressmen and women, business leaders, academics and more have pointed to higher education as something that is pivotal to the economic well being of the United States. If that’s true, then why has a four year college degree become so expensive?

When I attended Portland State University thirty years ago, the cost of full time tuition and fees per term for a state resident was $325. That included being able to take between 14 and 21 credit hours.

Nowadays, it costs around $4,000 per resident student for 21 credit hours, per quarter, to attend PSU. This autumn, a freshman entering PSU will pay $4136 for what used to cost $325 thirty years ago. That includes $594 for Obamacare, although PSU used to provide medical services to students in 1983. If you had the flu, you went and got a flu shot from the doctor on campus. I’m talking about a real MD doctor, and not a nurse. That $4136 nowadays also includes a one time $300 matriculation fee for incoming freshman. After that, what used to cost $325 costs only $3836, per quarter, unless you rack up other fees.

Wall Street investment corporations, such as Goldman Sachs, manufacturing corporations, such as Nike, and high tech corporations, such as Apple Inc., and Microsoft, have led us to this point because they’ve shipped our tax base overseas, and redistributed our tax base straight into the pockets of the 1 percent. That’s why the 1 percent steal over 30 percent of all the income produced in the USA, compared to 7 percent thirty-three years ago.

By the way, these companies have bought your favorite politicians, from Ronald Reagan to Bill Clinton, to John Boehner, to Ron Wyden, to Mitch McConnell, and tons of others. That’s precisely why these politicians continue to vote yes on failed free trade treaties. These politicians are redistributing your future, and the future of your children, to the 1 percent.

Free trade treaties make it easy for corporations to ship jobs overseas, as well as create them there.

The difference between the old wages here, and the new lower wages there, go into the pockets of rich fat cats via higher corporate profits, surging dividends and rising share prices. The same holds true when one of these corporate trade treaties makes it easy for corporations to create jobs overseas, rather than here. Here is a simple truism: Our tax base, which used to be so great that it could limit state university tuition and fees to $325, has been redistributed into the pockets of the rich via federal legislation called free trade treaties. Thank you George W. Bush. Thank you Bill Clinton. Thank you Barack Obama.

Now the money that middle class people used to earn, and that formerly helped to fund higher education, is now in the pockets of the 1 percent, and that cash is being used to redistribute more income from your pockets to theirs. This process will continue to jack up the cost of tuition and fees ever more, while simultaneously ensuring that there are limited job opportunities available to you when you graduate with $20-$50,000 in student loan debt. That’s because people in Vietnam and China are doing what should be your job. Meanwhile, the 1 percent is laughing at us all the way to the bank.

This economy has been rigged in the corrupt halls of government to ensure the 1 percent are winners, and the rest of us are losers for life.

That’s why Wall Street President Obama, and Wall Street Senator Ron Wyden, and Wall Street Congressman John Boehner are getting ready to vote yes on the Trans Pacific Partnership, the biggest free trade treaty of all time, but it’s really the biggest income redistribution scam of all time. Every single member of the US Senate, the US Congress, and that president sitting in the the white house, as well as all of his economic and other advisors, know this to be true, but they don’t care. Their job is to redistribute income from the 99 to the 1 percent.

Eventually, that big red dot above is going to explode because enough people won’t be able to pay back their loans. Wall Street investors will be saved, while loan recipients of the 99 percent will be hanged on a financial cross for the rest of their lives.

Note that when the bubble pops, and these student loan backed bonds drop to zero in value, the Obama administration, congress, and the Federal Reserve will rush to save the value of the bonds for the rich investors, while leaving the students to pay off their loans. The rich will come out smelling like a rose.

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