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This appears to be an even worse situation than 2008 because housing debt has gone down not because homes are cheaper, but that people can't buy homes. And othe

This appears to be an even worse situation than 2008 because housing debt has gone down not because homes are cheaper, but that people can't buy homes. And other forms of debt with far smaller effect on net-wealth and GDP as well far harsher discharge terms are eating up the difference. This makes for the same (or more) debt load in an even riskier, more individually onerous, combination.

slg 9y ago
I don't want to say that student loans aren't a big problem or that there isn't a bubble, but I think the panic of a potential repeat of 2008 is missing a big portion of the mortgage crisis. In 2008 there was a feedback loop that caused things to spiral out of control. Every house that was foreclosed on hit the market at a lower and lower price. This made it harder for people to refinance their existing mortgages. This was a huge problem because adjustable rate mortgages were all the rage leading up to 2008. The result was more foreclosures and then the loop repeated itself. That isn't possible with student loans. If the student loan market pops, it will be awful for banks, it will be awful for the stock market, it will be awful for the country as a whole, but it isn't inherently going to make other people's student loans more difficult to pay off.
- tsunamifury 9y ago
  Uh, extended graduated loan repayment with Libor variable rate, sir.
- downrightmike 9y ago
  We are kind of in the same place as the 2008 crisis, except the sub prime mortgages have been extrapolated out a level. The comercial product being sold today is the rent collected from the properties and the mortgage is the collateral. So if the renter can't pay, kick them out, The market shouldn't tank all at once, it will continue to go up 20% a year until nearly no one can afford to live in a house period. Then crash. http://www.motherjones.com/politics/2014/01/blackstone-rental-homes-bundled-derivatives http://www.motherjones.com/politics/2014/01/blackstone-renta...

slg 9y ago

I don't want to say that student loans aren't a big problem or that there isn't a bubble, but I think the panic of a potential repeat of 2008 is missing a big portion of the mortgage crisis. In 2008 there was a feedback loop that caused things to spiral out of control. Every house that was foreclosed on hit the market at a lower and lower price. This made it harder for people to refinance their existing mortgages. This was a huge problem because adjustable rate mortgages were all the rage leading up to 2008. The result was more foreclosures and then the loop repeated itself. That isn't possible with student loans. If the student loan market pops, it will be awful for banks, it will be awful for the stock market, it will be awful for the country as a whole, but it isn't inherently going to make other people's student loans more difficult to pay off.

tsunamifury 9y ago
Uh, extended graduated loan repayment with Libor variable rate, sir.
downrightmike 9y ago
We are kind of in the same place as the 2008 crisis, except the sub prime mortgages have been extrapolated out a level. The comercial product being sold today is the rent collected from the properties and the mortgage is the collateral. So if the renter can't pay, kick them out, The market shouldn't tank all at once, it will continue to go up 20% a year until nearly no one can afford to live in a house period. Then crash. http://www.motherjones.com/politics/2014/01/blackstone-rental-homes-bundled-derivatives http://www.motherjones.com/politics/2014/01/blackstone-renta...