Sunday, February 05, 2012

Student Loans

I got another comment from Foxessa, and I am reprinting part of it here, because it is awesome. This is about the cost of a college education:
Things changed very rapidly, beginning with allowing the same private institutions that brought you the sub-prime mortgage crisis, and all the rest of our current economic catastrophes to get into the student loan game while the federal money was used to secure them.

Even before that student loan money was excepted from the bankruptcy rulings, i.e. even if a person filed for personal bankruptcy, the loans would not be forgiven with other debt.

At the same time, because of the underwriting with federal money all those private lending institutions such as banks and others, tuition and other costs went sky high. Higher education became as much a financial bubble as the sub-prime mortgage ponzi scheme was.

So banks (and federal policy) have pushed the cost of education up, the way they pushed up the price of housing.

An awesome analysis, to which I add...

American industry -- and especially American governments -- are doing far less fixed capital investment than in the 20th century. (Most of the money governments spend on fixed assets -- highways and so on -- ends in the hands of private corporations, which do the actual work.)

This reduces the need for money capital, which means banks are less able to profit from traditional loans to industry. In addition, as corporations have increased in size, they are more and more able to pay for change and improvement (if any) with their own funds. Or so I have read.

So Wall Street roams like a pack of predatory dinosaurs, looking to make new kinds of loans and profit from them; and because Wall Street now controls the US government, it can shape laws in whatever way is most profitable.

In recent years, the loans have been to consumers: home loans, credit card loans, student loans. We are all feeding this useless section of the economy.


Blogger Foxessa said...

It's all about pillaging.

This is where capitalism must end up.

Just as in Owen Wister's The Virginian. The cattle baron, the mining baron and the railroad baron, comes to the pristine west, and uses it all up. Then moves on to the next big territory. They lament the loss of the magnificence of the environment but it never occurs to them at some point there will be no more to eat.

Love, C.

4:36 PM  
Blogger Hannah14 said...

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2:31 AM  

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