Student Loan Crisis Unfolds

Monday March 26, 2012

$270 Billion  in student lons are 30 days delinquent. 

We maintain that the trillion of student loans will be the sub prime crisis for the next financial meltdown. It may have begun already. While a dilapidated shack in Tornto or Detroit can lose most of its value, the dirt under the house should be worth something. 

This of course is not the case for a student loan. 

There is not collateral-only hours of college.

And the borrower is likely a zero asset person, now perhaps on food stamps. 

But Barack has our back on this one, right, now that the Federal Govt via hte Family Fedearl Education Program FFELP guarantees the loans. 

The hyper link is to a lenghty and informative artcle that should be read. 

Here is a graphic courtesy www.oftwominds.com

And just to make the point, here is a graph from another Charles Smith article. One of our readers has inquired about ratio charts, this one is a doozy.

This clearly shows that there has been one real bull market. The market of 1948-1966 was more conusmer driven debt than investing. Now we are on the same downward track again. Interesting that we are at the same ratio as the 1976 recovery after the December 1974 low of DOW 577. 

Comments

[StuartD]

Wow!- you guys have really outdone yourselves with these last several posts. Most impressive.

Update on Google\trends sees a spike for news and related searches on 'Robert Prechter' it's not a huge spike but if the past is any guide, it could mean more bullish action short-term. Of course, at any point, Mr. Prechter could 'get lucky' and reverse his recent run of bad luck(?) on mistimed market calls. It should be noted that I personally have a lot of respect for his socionomic insights which have been ground-breaking and I am merely trying to gauge mood via the public interest in his current market message.

[Jordan G.]

Stuart D got me interested

Here ya go Dr. Elam.
http://www.beaconequity.com/robert-prechters-dire-prediction-for-2012-2012-03-22/

[Dennis Elam]

Jordan

I think Bob Precther is overall right about the stock market. I would disagree on gold, none of the world governments intend to every pay off their debt, they are all General Motors now forever rolling over existing debt and then creating more. An article in the WSJ yesterday suggested there is not unlimited demand for US Treasuries.

[Quick Cash]

Student loan debt data for its report, The Project on Pupil Debt found that learners who received additional economical aid therapy from their school about the option government economical aid - which includes government grants and low-cost government student education economical loans - were known to take out fewer private student education economical loans than those learners who did not receive such therapy.

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