Tuesday, March 20, 2012

The Next Financial Crisis is Almost Here

The Occupods aren't the sharpest folks around (especially when it comes to cause and effect analysis), but they are onto something in demanding student loan forgiveness from the Government. They are painfully aware most of them will never be able to pay their student loans back. Just look at the types of degrees many are getting (Medieval Poetry, etc.). While it is a noble goal for government to try to increase the education levels of young people, they have once again taken it to excess as with the recent housing crisis. Easy access to money for college loans has led to the overexpansion of debt to levels beyond the repayment ability of a large percentage of borrowers, with government guaranteeing much of the debt. This easy money has also driven up demand for higher education resulting in costs way out of alignment with inflation. The creation and expansion of federally subsidized student loans has created another credit bubble that will pop someday soon and leave all taxpayers on the hook.

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