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There's been a lot of U.S. gov bailouts before covid. https://www.investopedia.com/articles/economics/08/government-financial-bailout.asp https://www.investope

There's been a lot of U.S. gov bailouts before covid. https://www.investopedia.com/articles/economics/08/government-financial-bailout.asp https://www.investopedia.com/articles/economics/08/governmen... The next one looks like student loans which totals $1.61T nation wide.

adam_arthur 4y ago
2008 bailout didn't even come close to the size of the Covid one. And there were far fewer "helicopter" dollars, no eviction moratorium, foreclosure moratorium, student debt forbearance. And the economy was much worse back then, with many high profile bankruptcies and slow gains in employment The initial Covid packages were warranted, but the packages passed in December 2020 and March 2021 were largely unnecessary after the initial shock had passed and the velocity in the drop in unemployment was already strong. Or they may have been warranted at a much smaller magnitude with more discretion in who received benefits. The consequence now is that the economy is so overstimulated, we basically have to force the recession we would have had anyway to prevent it from overheating. So we'll end up in the same place, but with a ton of extra debt to service
Zircom 4y ago
I'm all for the student loan bailout, at least this one is going directly to the pockets of consumers instead of having to trickle down like the PPP loans or previous corporate bailouts.
- lend000 4y ago
  Student loan holders already received 2 years of paused payments and an effective 20%+ reduction in debt due to inflation over that period. There is a lot wrong with our education system (including guaranteed infinite loans incentivizing high tuition prices -- a better system would be to just have some state schools be free, and like in Europe, more competitive. They would only be for people who really need them financially and have great potential academically). However, resetting student loans and letting the system continue is definitely NOT the solution.
  - MauroIksem 4y ago
    Most people didn't get a 20% raise during that time, so stating that debt reduction by 20% is a mute point.
  - MauroIksem 4y ago
    So why not both? Reset loans and don't let the current system continue? Your argument is a weird one. It literally hurts no one to forgive the loans but a lot of people don't want to see and i think that's because those people who don't have student loans feel like they're losing an advantage.
    - lend000 4y ago
      Because no one is talking about doing both -- the only policy being discussed by populists is the simplistic option (cancel loans or don't cancel loans). Also, all of those loans (and I have a fair amount as well) were taken voluntarily by adults capable of handling responsibility and consequences. If there was any fair way to do it, it would be to reimburse the last X years worth of student loan payments, such that people who forewent savings to pay down their debts aren't penalized compared to people who did not. > It literally hurts no one to forgive the loans Also want to address this, because I feel like it's a common misconception, especially with Gen Z. It's basically an inflationary policy to forgive debts. So it does hurt anyone who is affected negatively by inflation, while certainly not being "fair" for the reason mentioned above (some responsible adults actually paid their debts and are penalized for that). We all make mistakes (such as taking out massive loans to go to acting school and having it not materialize), but consequences are the side effect of living in a consistent reality. If you make financial reality inconsistent by forgiving loans, you incentivize more of that bad behavior. Also note that most degree holders with student debt are not the lower class, but the middle and upper middle class. Student loan forgiveness is a handout for an educated class of people who are generally doing much better than the poorest in society.
    - nradov 4y ago
      Should taxpayers who never went to college and didn't take out any student loans have to bear the financial burden? Should borrowers who did the responsible thing and paid back their loans already receive a retroactive refund?
gumby 4y ago
I don’t think a 100% bailout is under discussion; the most likely scenario is $10K relief which will zero the balances of 30% of student debt holders and cost $37B. Since most of that 30% have low income and come from low income backgrounds it will be a struggle to get it passed. A shame as those are the ones that need it the most. It’s interesting to note that Social Security was designed to cover 100% of the population even though only a smaller segment needed it, specifically to make it harder to kill. For student debt that would be an impossible sum and unnecessary.
- RickJWagner 4y ago
  You hit the nail on the head when you mentioned Social Security-- that's where the rescue efforts need to be concentrated. Student debt problems are entirely self-inflicted. Students taking the loans made their own decisions. Social Security users have been paying for decades (not taking, as the student loan recipients were). Social Security users, especially those who have not yet started collecting, have worked decades to get their benefits back. If students get their loans paid off before Social Security is fixed, it's a certain sign of corruption. (Votes for money.) Use your votes to make government effective. Vote for politicians that pledge to fix Social Security.
  - gumby 4y ago
    Don’t be distracted by all the elaborate theatre of “trust fund” and “paying in”. There is zero chance of you not getting social security payments.
    - RickJWagner 4y ago
      Agreed there will be a Social Security payment. But it will be reduced from today's levels. Remember, older folks don't have time to remain in the labor force (unlike younger people, who will benefit from rising paychecks.) At the end of the spectrum, there is only what has been saved (which is reduced by inflation) and pensions, Social Security.
- areyousure 4y ago
trident5000 4y ago
Every time the government gets involved markets get distorted and we pay the price down the road. Guaranteed home loans from the govt with almost no down payment caused lenders to not check credit and then we had 2008. Very similar situation with government education loan guarantees. And then legislators pretend to fix the problem with bailouts but we all pay with an inflation tax. Its robbery from savers to what should be risky borrowers. On top of that we now have these bloated education institutions that offer bs degrees and wacky educators because of the artificial propped up market that is detached from economics and value.
- deleted 4y ago
  [deleted]
- digisign 4y ago
  This is true and shouldn't be downvoted. Only quibble is the alarmist tone, however the situation is and should be somewhat alarming. Folks often recommend putting out the fire with gasoline, unfortunately. For example another poster recommends free or low-price state schools, instead of handing out mountains of freshly created money. One of those is incredibly inflationary, the other is not.

adam_arthur 4y ago

2008 bailout didn't even come close to the size of the Covid one. And there were far fewer "helicopter" dollars, no eviction moratorium, foreclosure moratorium, student debt forbearance. And the economy was much worse back then, with many high profile bankruptcies and slow gains in employment The initial Covid packages were warranted, but the packages passed in December 2020 and March 2021 were largely unnecessary after the initial shock had passed and the velocity in the drop in unemployment was already strong. Or they may have been warranted at a much smaller magnitude with more discretion in who received benefits. The consequence now is that the economy is so overstimulated, we basically have to force the recession we would have had anyway to prevent it from overheating. So we'll end up in the same place, but with a ton of extra debt to service

Zircom 4y ago

I'm all for the student loan bailout, at least this one is going directly to the pockets of consumers instead of having to trickle down like the PPP loans or previous corporate bailouts.

lend000 4y ago
Student loan holders already received 2 years of paused payments and an effective 20%+ reduction in debt due to inflation over that period. There is a lot wrong with our education system (including guaranteed infinite loans incentivizing high tuition prices -- a better system would be to just have some state schools be free, and like in Europe, more competitive. They would only be for people who really need them financially and have great potential academically). However, resetting student loans and letting the system continue is definitely NOT the solution.
- MauroIksem 4y ago
  Most people didn't get a 20% raise during that time, so stating that debt reduction by 20% is a mute point.
- MauroIksem 4y ago
  So why not both? Reset loans and don't let the current system continue? Your argument is a weird one. It literally hurts no one to forgive the loans but a lot of people don't want to see and i think that's because those people who don't have student loans feel like they're losing an advantage.
  - lend000 4y ago
    Because no one is talking about doing both -- the only policy being discussed by populists is the simplistic option (cancel loans or don't cancel loans). Also, all of those loans (and I have a fair amount as well) were taken voluntarily by adults capable of handling responsibility and consequences. If there was any fair way to do it, it would be to reimburse the last X years worth of student loan payments, such that people who forewent savings to pay down their debts aren't penalized compared to people who did not. > It literally hurts no one to forgive the loans Also want to address this, because I feel like it's a common misconception, especially with Gen Z. It's basically an inflationary policy to forgive debts. So it does hurt anyone who is affected negatively by inflation, while certainly not being "fair" for the reason mentioned above (some responsible adults actually paid their debts and are penalized for that). We all make mistakes (such as taking out massive loans to go to acting school and having it not materialize), but consequences are the side effect of living in a consistent reality. If you make financial reality inconsistent by forgiving loans, you incentivize more of that bad behavior. Also note that most degree holders with student debt are not the lower class, but the middle and upper middle class. Student loan forgiveness is a handout for an educated class of people who are generally doing much better than the poorest in society.
  - nradov 4y ago
    Should taxpayers who never went to college and didn't take out any student loans have to bear the financial burden? Should borrowers who did the responsible thing and paid back their loans already receive a retroactive refund?

gumby 4y ago

I don’t think a 100% bailout is under discussion; the most likely scenario is $10K relief which will zero the balances of 30% of student debt holders and cost $37B. Since most of that 30% have low income and come from low income backgrounds it will be a struggle to get it passed. A shame as those are the ones that need it the most. It’s interesting to note that Social Security was designed to cover 100% of the population even though only a smaller segment needed it, specifically to make it harder to kill. For student debt that would be an impossible sum and unnecessary.

RickJWagner 4y ago
You hit the nail on the head when you mentioned Social Security-- that's where the rescue efforts need to be concentrated. Student debt problems are entirely self-inflicted. Students taking the loans made their own decisions. Social Security users have been paying for decades (not taking, as the student loan recipients were). Social Security users, especially those who have not yet started collecting, have worked decades to get their benefits back. If students get their loans paid off before Social Security is fixed, it's a certain sign of corruption. (Votes for money.) Use your votes to make government effective. Vote for politicians that pledge to fix Social Security.
- gumby 4y ago
  Don’t be distracted by all the elaborate theatre of “trust fund” and “paying in”. There is zero chance of you not getting social security payments.
  - RickJWagner 4y ago
    Agreed there will be a Social Security payment. But it will be reduced from today's levels. Remember, older folks don't have time to remain in the labor force (unlike younger people, who will benefit from rising paychecks.) At the end of the spectrum, there is only what has been saved (which is reduced by inflation) and pensions, Social Security.
areyousure 4y ago

trident5000 4y ago

Every time the government gets involved markets get distorted and we pay the price down the road. Guaranteed home loans from the govt with almost no down payment caused lenders to not check credit and then we had 2008. Very similar situation with government education loan guarantees. And then legislators pretend to fix the problem with bailouts but we all pay with an inflation tax. Its robbery from savers to what should be risky borrowers. On top of that we now have these bloated education institutions that offer bs degrees and wacky educators because of the artificial propped up market that is detached from economics and value.

deleted 4y ago
[deleted]
digisign 4y ago
This is true and shouldn't be downvoted. Only quibble is the alarmist tone, however the situation is and should be somewhat alarming. Folks often recommend putting out the fire with gasoline, unfortunately. For example another poster recommends free or low-price state schools, instead of handing out mountains of freshly created money. One of those is incredibly inflationary, the other is not.