US taxpayers are on the hook for a $435 billion loss on the $1.37 trillion in student loans that were on the government’s books at the beginning of this year, according to an internal study by the Department of Education recently reported by the Wall Street Journal.
That’s before any loan forgiveness program that might come down the pike under the Biden administration. And the massive number doesn’t account for any student loans issued going forward. It also does not include student loans issued by private lenders but still guaranteed by the federal government.
Student loan debt continues to surge despite falling college enrollment.
In Q3, student loan balances rose by $23 billion from the second quarter, according to the latest Federal Reserve data.
While the markets were giddy about the prospects of a coronavirus vaccine, the Federal Reserve was warning of more economic chaos on the horizon.
The Fed released its biannual Financial Stability Report Monday. The report warned we could see a wave of defaults and “significant declines” in asset prices in the near future.
The debt monster is loose.
S&P Global Ratings projects the global debt-to-GDP level will swell to a record 265% this year. It also expects insolvencies and defaults to rise to levels not seen since the 2009 crisis.
Stocks sold off Monday as markets fretted over the lack of progress on stimulus and a rise in COVID-19 cases. In his podcast, Peter talked about the sell-off and the political dynamics driving the markets right now. He also drove down to a question nobody seems to want to grapple with: why are the markets and the economy so dependent on and desperate for stimulus?
It’s not just the federal government running massive deficits and piling up enormous levels of debt. Thirty-nine US states don’t have enough money to pay all of their bills.
That was the grim conclusion of Truth in Accounting’s annual Financial State of the States report.
The report summarizes a comprehensive analysis surveying the fiscal health of the 50 states prior to the coronavirus pandemic.
The Federal Reserve wrapped up another FOMC meeting this week. The central bank delivered pretty much what was expected. The easy money will continue to flow unabated. But it looks like what is expected is no longer enough. The addict wants even more of the monetary drug. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the Fed meeting and the market reaction.
Vitaliy Katsenelson serves as the chief investment officer at Investment Management Associates in Denver. In an article he wrote for MarketWatch, he admits his company has resisted buying gold in the past.
But the company is buying gold now.
The Nasdaq and S&P500 made new all-time highs last week. That leads many people to believe the economy must be doing OK. But as Peter Schiff explained in his podcast, the very thing that’s helping Wall Street boom is crushing the actual Main Street economy.
The world is drowning in debt.
And central bank policies globally are encouraging even more borrowing. Most people don’t seem to care. “This is necessary during this time of crisis,” has become the mantra. But the ugly truth is the world was already drowning in debt before the coronavirus pandemic. The government response to COVID-19 has merely exacerbated the problem. And it’s important to understand that debt is neither free nor irrelevant.