Arbitrarily Low College Loan Interest Rates Harm Students, Taxpayers
Posted by admin / Under Interest Rate Risk
A government policy of subsidizing loans and encouraging people to borrow huge amounts that many won’t be able to repay has run-up $1 trillion worth of questionable debt. A growing number of experts fear that borrowers are paying more than the market can support, and some economists are warning of a bubble that could trigger a larger financial crisis. A spokesman for the President’s Consumer Financial Protection Bureau says the industry is likely “too big to fail.” Unfortunately, these are not headlines from the 2008 home mortgage meltdown. They instead describe current reports about the state of student higher education...
Published on Tuesday 22nd of May 2012 05:29:54 AM
Obama's Budget: 'Interest Payments Will Exceed Defense Budget' in 2019
Posted by admin / Under Interest Rate Risk
The latest chart from the Senate Republican Budget Committee, pointing out that under President Obama's budget, the U.S. government will be spending more in 2019 to pay the interest on the national debt than it will be to defend America:
Published on Tuesday 22nd of May 2012 05:29:54 AM
Bond Collapse Continues
Posted by admin / Under Interest Rate Risk
Much to the chagrin of the Federal Reserve, bond traders are taking that FOMC statement from yesterday and taking no prisoners as they literally hammer the long bond into submission. I find it a bit ironic (to be honest I am gleeful about it) that the Fed, which continues its attempts to manipulate hedge fund behavior by herding them into the equity markets, has opened an enormous can of worms and awakened the heretofore comatose bond vigilantes as an undesirable chain reaction to their "peachy" statement about the state of the US economy. Bond traders are already moving the Fed...
Published on Tuesday 22nd of May 2012 05:29:54 AM
BIGGEST PROFIT MARGINS IN HISTORY
Posted by admin / Under Interest Rate Risk
[T]he number one question pouring in is about the banks and their profit margin. Yes, the bottom line remains that the cost of money declines sharply for depositors while the cost of borrowing rises. Where the value of cash for three years is 0.7% to a depositor, for a fully collateralized borrower, the cost is about 4%. This is a profit margin for the banks of 571%. In other words, when the discount rate was 17% in 1981, this would have been the equivalent of a prime rate at 9707%. The profit margin at banks has NEVER been so high....
Published on Tuesday 22nd of May 2012 05:29:54 AM
An Epic conflict of interest
Posted by admin / Under Interest Rate Risk
Meet Judy Faulkner. She is the founder and CEO of Epic Systems Corporation in Wisconsin. She is also a member of the GAO Health Information Technology Policy Committee and an advisory board member of the Journal of Healthcare Information Management. She is also politically active. In 2008, Faulkner gave at least $110,000 to political organizations and candidates, including $57,000 to the Democratic National Committee and $2,300 to then-Senator Barack Obama, according to the Center for Responsive Politics. After Obama’s election, Faulkner continued giving to the Democrats, giving at least $85,000 through the 2010 midterm election. In 2010, Faulkner gave $60,000...
Published on Tuesday 22nd of May 2012 05:29:54 AM
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