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The federal government initiated the student loan program in 1958 in response to the launch of Sputnik the year before by the Soviet Union. “High school students who showed promise in mathematics, science, engineering, and foreign language, or those who wanted to be teachers, were offered grants, scholarships, and loans.” In 1965, the government passed The Higher Education Act, which provided more college grants to students, especially lower-income students. The Pell Grant was established for students in 1972 (Citlen).

Then somebody on Wall Street came up with the idea of securitizing student loans, which meant pooling student loans, selling them to investment companies, which would then issue bonds to investors backed by the loans. Student loan payments would primarily go to the investors, with a little to spare to pay for the service providers.

From a Wall Street point-of-view, billions of dollars a year could be made in fees every step of the way with every securitized student loan. Subsequently, Wall Street investors successfully pushed government legislators to reduce grants and to issue more student loans. That is how the US government, as well as politicians of both political parties, has used the student loan program to redistribute billions of dollars of income yearly from the 99 to the 1 percent via the conduit of student loan-backed bonds.

This forced students to borrow more money to help finance their higher education than would otherwise be the case, making loan defaults more likely, especially during economic downturns. The Great Recession hit in December 2007 and lasted until June 2009, but the negative effects of this disaster have continued. The government, of course, is working hard to disguise how bad the situation really is.

Five years ago, fearing an increase of student loan defaults, and a massive devaluing of the student loan backed bonds they owned, investors began selling off their bonds, which resulted in declining values. They couldn’t stand this. Something had to be done to restore investor confidence, and so the federal government doubled student loan interest rates on all new loans from 3.4 to 6.8 percent on July 1, 2013 (Sheehy).

This increased the return on investment while doubling the burden on the 99 percent who take out new loans to finance their college education. The public outcry was so heavily against this increase politicians felt compelled to reduce student loan interest rates within a year. The burden for students and their families had been too great. The US government dropped the rate to 4.9 percent in 2014, which was still a nearly 50 percent increase over 3.4 percent (Lobosco). Doing so, however, stabilized the market for student loan-backed bonds.

Dictionary.com defines “crisis” as “a dramatic, emotional or circumstantial upheaval in a person’s life.” Student loans are a perfect example of such a crisis in the personal lives of borrowers. In 2016, total outstanding student loans represented roughly 7.5 percent of the United States gross domestic product (GDP), up from 3.5 percent only ten years earlier (ACE). Nearly 43 million Americans were chained like slaves to rich bondholders via student loan debt, each with an average balance of $30,000 in 2016 (Friedman).

The cost of university education has grown faster than the value of Federal Pell grants (in current dollars) since 1976. The average Pell grant in 1976 paid 72 percent of the maximum cost of going to a public four-year college or university. This figure grew to 79 percent in 1979. Nowadays, the average Pell grant is less than half of that, hovering inside the 32 to 34 percent range (ACE). Therefore, students have had to increase their borrowing to fund their higher education and Wall Street investment banks and investors of the 1 percent all benefit from this higher student loan debt.

As the negative economic consequences of the Great Recession of 2007-2009 slowly gave ground to better times, student loan defaults fell, from nearly 15 percent in 2013 to 11.8 in 2015 to 11.3 percent in 2016. Defaults occur when former students go 360 days without making a payment. About 593,000 former college students out of 5.2 million total borrowers were in default on their federal debt as of Sept. 30, 2015, the US Department of Education reported. Default rates at public and for-profit colleges dipped, while private, nonprofit schools experienced a slight increase (Nasiripour).

Perhaps the biggest reason the default rate declined was that student loan borrowers deferred their payments at increasing rates, and for longer periods. The default rate, therefore, doesn’t accurately represent the degree to which former students have problems making their loan payments. An Obama White House report said in 2015, “The cohort default rate published by the Education Department is “‘susceptible to artificial manipulation.’”

The share of student borrowers paying down their loans more accurately reflects what is occurring than default rates alone (EPI). The report noted that a rising number of students are unable to make payments on their loans, but manage to avoid defaulting. Because of this, the report stated the actual default rate at four-year institutions is about 12.5 percent, and 25 percent for community colleges. For-profit colleges and universities have a 30 percent default rate. 41.5 million Americans owed more than $1.4 trillion federal student loans by the end of 2016. About one in every four borrowers is either delinquent or in default the report stated. Furthermore, “total indebtedness has doubled since 2009” (Nasiripour).

However, it turns out the White House report understated the numbers by quite a lot. Leaked documents showed only 46 percent of students out of school three years or more are paying down their student loan debt (Obama’s Student Loan Fiasco). This means 54 percent are not paying down their loans. Something else is terribly amiss as well. To be among the 46 percent, you cannot be in default, and you must have paid down the principal of your loan by at least one dollar. So if somebody who has owed $30,000 in student loans since they graduated from college ten years ago paid a dollar on the principal of their loan eight years ago, they have officially paid down their loan and are among the 46 percent. In other words, the bar for those who have not defaulted and are paying down their loans are about as low as one can get.

The government is paying the interest on student loans to bondholders for people who cannot pay down their loans. In other words, the rich are getting richer at the expense of the government and those who are paying down their student loans.

Clearly, tens of millions of people are in a state of personal crisis when it comes to student loans they cannot pay off. In addition, the next economic downturn may bring about a crisis in the financial markets centered on student loans, just as it occurred last time, only it will likely be worse. That economic crisis is looming.

People who have left higher education institutions saddled with an average of $30,000 in debt and limited job prospects are facing a crisis, which will only bring about another crisis in the student loan-backed bonds markets. Student loan debtors have other debts and bills to pay that turn their student loans into tens of millions of individual financial catastrophes, forcing them to spend years postponing payments so they can make their monthly mortgage payments, rent payments, put food on the table, pay their monthly bills, and raise their children.

People go to universities to increase their earning power so as to enjoy greater fruits of their labor. However, the growth of wages and salaries for most people have been flat or in decline for the last thirty-seven years when the official inflation rate is factored in. However, there is significant evidence this official rate is heavily understated, which means people are coming out of college and earning less in real terms than their parents thirty-seven years ago. This is why many people remain mired in student loan debt. Prices are going up faster than their earnings. They simply cannot pay it off and are forced to postpone payments for years and decades.

The remedy to this situation is to increase Pell Grants or simply make college free. According to the nonpartisan Office of Budget Management, the US government is giving the 1 percent and corporations $1.5 trillion dollars over ten years with the new Republican tax cut. Surely the US government can afford to provide such a sum to the middle class via a similar amount, thereby rendering college free. Studies clearly show this would be good for the US economy while there is not one scrap of evidence the tax cuts will do anything positive for the economy.

Student loans are an example of the golden rule of massive US government corruption; he or she who has the gold makes the rules that redistributes income and wealth their way from the less financially well endowed. Nobody knows this better than Wall Street Senator Ron Wyden.

Works Cited
Friedman, Dan. Americans Owe $1.2 Trillion Dollars In Student Loans. New York Daily News, May 17, 2014. http://www.nydailynews.com/news/national/americans-owe-1-2-trillion-student-loans-article-1.1796606

American Council on Education, (ACE) http://www.acenet.edu/news-room/Documents/FactSheet-Pell-Grant-Funding-History-1976-2010.pdf

Investment Memo. Merganser Capital Management, 2016 http://www.merganser.com/PDF/Memo/2015-Q3.pdf
http://money.cnn.com/2012/09/28/pf/college/student-loan-defaults/

Carrillo, Raul. How Wall Street Profits From Student Debt, Rolling Stone. Rolling Stone Magazine, April 14, 2016).

Sheehy, Kelsey. What the Stafford Loan Rate Hike Means for Students. US News and World Report, March 7, 2013 http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/07/03/what-the-stafford-loan-interest-rate-hike-means-for-students

Obama’s Student Loan Fiasco. Wall Street Journal (WSJ), Jan. 22, 2017

Allan, Nicole, Thompson, Derek. The Myth of the Student Loan Crisis. Atlantic Monthly, March 2017

Citlen, Jeff. A Look into the History of Student Loans. http://www.Lendedu.com, August 15, 2016

Lobosco, Katie. Student Loan Interest Rates Are Going Down. CNN Money, June 30, 2016 http://money.cnn.com/2016/06/30/pf/college/student-loan-interest-rates/

Nasiripour, Shahien. Student Loan Defaults Drop, but the Numbers Are Rigged. Bloomberg News, Sept. 28, 2016
https://www.bloomberg.com/news/articles/2016-09-28/student-loan-defaults-fall-but-the-numbers-are-rigged

Kroeger, Teresa; Cooke Tanyell; Gould, Elise. The Class of 2016. Economic Policy Institute. 21/04/2016. http://www.epi.org/publication/class-of-2016/

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Hillary Clinton’s new book, What Happened shows she is completely out of touch with reality and voter’s anxieties over the economic policies that have redistributed trillions of dollars from the 99 to the 1 percent. These policies were championed by her, former President Bill Clinton, former President Barack Obama, former President George W. Bush, and a host of other Republicans and Democrats, such as Mitch McConnell, John Boehner, and Wall Street’s favorite brown-noser, Wall Street Senator Ron Wyden.

In her book, Clinton blames Bernie Sanders for her defeat in the presidential election. She claims Sanders candidacy split the progressive vote. Hogwash! Hillary lost the presidential election because she is a gold plated pawn of Wall Street. Voters were tired of their jobs and tax dollars being exported to Mexico, China, and Vietnam. Clinton supported the policies that did this. Wall Street loved her support for these policies.

The CEOs of Wall Street, other major corporations, and billionaire investors rewarded her and her husband with $150 million in speaking fees from 2001 to 2016, at $225,000 a pop. Progressive voters knew that yes big money had gotten her to change her mind on legislation cutting back on the abilities of working folks to declare bankruptcy on behalf of the big banks who had purchased her lock, stock and barrel (See video above). Progressives knew the mind boggling millions of jobs that would have been exported from the United States to China with the Trans Pacific Partnership, which she called the “gold plated standard” for trade agreements. Then, of course, there was her support as Secretary of State for the coup that overthrew the lawful government of Honduras and resulted in the death of hundreds. You could go on and on about why progressives could not and would not support Candidate Clinton, but you cannot blame Bernie Sanders.

Hillary is completely out of touch with reality, but the book suggests she might want to run for president again.

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The Wall Street Journal reported a few days ago that the Securities Exchange Commission (SEC) has significantly reduced the number of regulations it is supposed to enforce. Quite naturally, as was shown in 1929, 2007-09, 2001, the entire 1980s and 1990s, as well as many other times in US and world history, Wall Street millionaires and billionaires will break the law while redistributing income from the 99 percent to themselves. Then the taxpayers (that’s us folks) will bail them out after the financial disaster, and this will make the rich even richer, and not a soul will go to jail.

The Journal reports that Trump’s appointees to the SEC have significantly slowed down on enforcement. Trump, along with every Republican office holder in the US congress, wants to eliminate the weak Dodd-Frank legislation that makes it a little bit harder than before to screw over the US public.

The Republicans chief economic policy is to unleash Wall Street as a destructive force in the world, allow it to wreck financial on everybody else, in order to knock the economy flat on its face. That is the Republican Party economic policy in a nutshell.

Of course, the Republicans have always had help from the Democratic Party, which is largely, if not completely, controlled by Wall Street billionaires. Many Democrats have been instrumental in helping the Republicans achieve the desires of their Wall Street masters. President Clinton signed legislation repealing Glass-Steagal, as well as NAFTA. The president was supported in this by Hillary Clinton. Wall Street Senator Ron Wyden. These folks continued to serve Wall Street’s interest under then Wall Street President Barack Obama.

The Clinton’s get $225,000 a piece for making speeches from Wall Street, while Obama gets $400,000.

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The appliance maker Whirlpool has asked the U.S. government to impose trade barriers on washing machines imported from South Korean companies, escalating a trade dispute that has been ongoing for years.

Anybody with half a brain could see this coming before President Obama and his henchmen and henchwomen, like Wall Street Senator Ron Wyden, signed the South Korea Free Trade Treaty. Yet, Obama and his sleazy corporate Demorats, like Wyden, pushed for this scam anyway, mainly because it redistributes income from US workers to billionaire US investors, hedge funds and other finance types that finance the Demorat Party.

With headquarters in Benton Harbor Michigan, Whirlpool Corporation is the world’s largest home appliance maker. In the U.S., Whirlpool has eight manufacturing facilities: Amana, Iowa; Tulsa, Oklahoma; Cleveland, Tennessee; Clyde, Ohio; Findlay, Ohio; Greenville, Ohio; Marion, Ohio; and Ottawa, Ohio. Whirlpool has five factories in Mexico. Whirlpool has over 28,000 employees in the United States and Mexico. Those jobs are at risk.

USA Today reports that “In filing a petition to the U.S. International Trade Commission Wednesday, the Benton Harbor, Michigan-based manufacturer is seeking remedy from U.S. regulators on its claim that Samsung and LG are selling their washing machines in the U.S. at prices that are below the prices charged by American companies or below their cost of production.”

The U.S. government has twice found that Samsung and LG were selling in the U.S. at unfairly low prices. But Samsung and LG responded by “relocating their production facilities to other foreign countries in order to circumvent the U.S. government’s rulings,” Whirlpool says.

Whirlpool is a supporter of free and fair trade. According to company’s website, “We believe competition is healthy and breeds innovation. That’s why we support free and fair trade and promote an open global trading system that benefits our consumers, employees and the entire home appliance industry. Enforcing open, rules-based trade policies ensures the highest level of investment, innovation and choice for consumers around the world. Supporting free and fair trade increases industry access and incentivizes innovation globally, helping us to protect jobs and ensure continued innovation and investment in the appliance industry.”

Obama and Wyden supported the South Korea Trade Scam, and US citizen’s and now paying the price. Click on the following link for more on the story, whirlpool-files-complaint-samsung-lg-dump-washers-us–USA Today

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Wall Street Democrats, such as Wall Street-owned president’s Bill Clinton and Barack Obama, as well as Wall Street’s senator’s Hillary Rodham Clinton and Ron Wyden, have led the way toward trade deals that have exported tens of millions of US jobs overseas, with the difference between the old higher US paying jobs and the new lower paying US jobs going directly into the pockets of the rich via higher corporate earnings, rising share prices and surging dividends.

These income redistribution scams are the primary reason income and wealth inequality have grown so lopsided in favor of the billionaires over the previous 35 years or so. Most of the Republican Party have stood right behind the Clinton’s, Wyden and Obama on these income redistribution scams. 86 percent of Republican voters understand these trade scams are intended to export US jobs, compared to 52 percent of Democratic voters. So the Republican leadership is happy to negotiate with the Wall Street DNC Democrats to take the lead on these trade scams. In fact, the two sides have worked together to create the income and wealth inequality in which we now suffer. That’s why Donald Trump is president.

So how do the Democrats get out of being blamed for exporting tens of millions of jobs and creating such massive income and wealth inequality? They lie and spread these lies using a number of corporate news outlets and fake academic studies that come from real universities.

When Barack Obama became president, and for a few years afterward, the US failed to create any net jobs. And so members of the Democratic Party came up with the ingenious lie; automation killed the jobs. Since then the economy has created twelve million new jobs, and you will notice automation hasn’t killed those jobs. Nor has automation killed the tens of millions of US jobs that have been exported to China, Vietnam, Mexico and elsewhere.

I’ve written about this Democratic Party lie many times.

Now in a new report, economists Lawrence Mishel and Josh Bivens of the Economic Policy Institute challenge the Democratic Party lie that the pace of automation is accelerating and that the use of robots will lead to much higher unemployment and greater inequality. They also point out that there is not one shred of evidence in any study showing that technology and automation are killing more jobs than they are creating. The authors argue that if automation actually led to higher overall joblessness, the United States would have seen consistently increasing unemployment over the last 70 years. That didn’t happen because technology and its offshoot called automation actually create more jobs than they displace.

Likewise, if automation were indeed surging and leading to joblessness in recent years, we would not have been able to reduce the unemployment rate from 10 percent in 2010 to under 4.3 percent now. The authors encourage policymakers to focus on the immediate need to create good jobs and robust wage growth—instead of getting worked up about a hypothetical “robot apocalypse.”

The imbalance of political power between the 1 and the 99 percent are the current reason why income and wealth inequality has grown over the last 3 1/2 decades.

For more information, click on the report at “The Zombie Robot Argument Lurches On; There is no evidence that automation leads to joblessness and or Inequality–Economic Policy Institute

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The corporate media consistently lies to us on behalf of the billionaires and has seemingly forever. A good example is Genetically modified crops (GMO’s). They were supposed to be safe and have higher yields than traditionally planted or organic crops.

Last year, a study by the United States National Academy of Sciences, Engineering and Medicine showed that GMO crop yields were less than many traditionally planted crops, such as rapeseed and sugar beets. Some GMO crop yields were about the same as traditionally planted crops, such as corn.

The corporate news media also claimed using GMOs would reduce the use of herbicides and insecticides, which is ridiculous since the GMO herbicides and insecticides are genetically placed into the GMO plants, and not sprayed outside the plant, and then you eat those bug and plant killers when you consume the plant. The folks of the corporate news media also don’t want you to know the information in the previous sentence.

When a bug bites into a GMO plant, the Bt toxin genetically placed into the plant kills the bug by swelling up its intestines until it explodes. The Ht toxin or herbicide placed into plants prevents weeds from growing near crops by killing them. You eat the Bt and the Ht toxins when you consume the crop.

In many cases, insects have adapted to the GMO Bt and Ht toxins and forced GMO farmers to use greater and stronger amounts of insecticides and herbicides. This is why herbicide use has grown in the USA, while insecticide use has stayed the same. Now if you count the pesticide genetically placed into GMO crops, it’s likely US insecticide use has grown. By way of contrast, in France, where GMO’s are not allowed to be planted, insecticide use has declined.

Herbicide use in the USA is the upper line, the lower line is herbicide use in Europe

“Safe” was the biggest corporate news media lie when it comes to GMOs. To this day they continue to express this lie to us, as do politicians of both major political parties. The Monsanto Corporation applied to get its GMO’s entered into the US food chain to the United States Food and Drug Administration (USDA) a couple of decades ago, which granted its request on the basis of Monsanto’s own unbiased (I mean that sarcastically) tests of its product on rats. It turns out the tests supposedly lasted all of three months, and the USDA failed to do any of its own testings. The USDA approved the GMO poison for the US food chain.

When an independent French study showed GMOs caused tumors in rats after eating GMOs for more than three months, the US corporate media establishment attacked the study, following the lead of the GMO corporations. Not once did a major US news outlet investigate to see if maybe Monsanto’s testers had a reason to study rats and GMO consumption for more than three months. Odds are the Monsanto researchers knew their product caused tumors in rats, but only after three months of feeding them the GMO poison. So they only supplied the data for the first three months of rats being fed GMOs. See Scientist Who Discovered GMOs Cause Tumors in Rats Wins Landmark Defamation Lawsuit in Paris–Healthnut.com

GMO crops are less labor intensive than traditionally planted crops, and therefore cheaper to grow and more profitable. There lies the reality behind all the liOddes. The corporate news media doesn’t want to offend food advertisers, such as Safeway, Walmart, Albertson’s, Krogers, Nestle, Coca-Cola, Pepsi-Cola, General Mills and many more because they all use GMO’s to increase their profit margins, and keep their share prices higher than they would otherwise be.

In addition, of course, keeping us misinformed helps giant GMO manufacturers like Bayer, which is currently the owner of Monsanto, as well as the powerful Wall Street investment banks, such as Goldman Sachs, Citibank and JP Morgan Chase.

All of these corporations keep the pressure on the corporate news media to keep us uninformed and misinformed about many issues, such as GMOs, which have been linked to tumors, autism, obesity, allergies and many more health issues in humans. Keeping us misinformed and uninformed on behalf of billionaires, hedge funds, both major political parties, major investment banks and food manufacturers is, in fact, their job.

 

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On April 28 a “transcript was released from the most recent hearing at a federal court in Fort Lauderdale, Fla., on the lawsuit filed on behalf of Bernie Sanders supporters against the Democratic National Committee and former DNC chair Debbie Wasserman Schultz for rigging the Democratic primaries for Hillary Clinton. Lawyers for the DNC argued the DNC has a right to pick candidates in a back room.

The corporate press is doing its best to ignore this class action lawsuit alleging the Democratic National Committee (DNC) worked directly in conjunction with Hillary Clinton’s 2016 campaign to keep Bernie Sanders out of the White House. This lawsuit has been raging on in the courtrooms for months on end–and yet, most people have no idea of its existence, in large part thanks to the corporate media’s total lack of coverage.

The lawsuit alleges the Democratic National Committee, which is managed by Wall Street toadies who fear Bernie Sanders, worked side-by-side with the Hillary Clinton campaign to derail the Sanders challenge last year in the Democratic presidential primary. If true this violated the Democratic Party’s own charter, specifically Article 5, Section 4, which specifically states the DNC cannot work with a “single campaign to effectively choose who would win the Democratic ballot, the attorneys stated in the suit.”

According to Newsweek, “The most recent court hearing on the case was held on April 25, during which the DNC reportedly argued that the organization’s neutrality among Democratic campaigns during the primaries was merely a “political promise,” and therefore it had no legal obligations to remain impartial throughout the process.”

In other words, the DNC is admitting guilt while insisting it did no wrong in directly supporting Wall Street’s choice to be the Democratic Party candidate for US president because they certainly didn’t want the people’s candidate

For more on this story click the links below.

The Lawsuit—Newsweek

DNC Lawyers Argue DNC Has Right to Pick Candidates in Back Rooms

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