5 ms·

Will there be 50B+ in student loan delinquencies in US?

29 points by _7axl 2y ago

deleted 2y ago
[deleted]
elzbardico 2y ago
As per usual, HN will deny that the US economy is cratering, I will be downvoted to hell for saying so, but "E pur si muove".
- ta988 2y ago
  Cratering for short, long or indefinite term that's the real question.
- boppo1 2y ago
  There is room yet to erode the dollar to inflate asset prices. High asset prices equal a strong economy, right?
- gedy 2y ago
  It's US election time and people go crazy with mental gymnastics to protect their team if they are in power, or exaggerate if the other team is. Not a great time to discuss things objectively.
- vkou 2y ago
  Doomsayers have predicted 16 of the past 2 recessions, in addition to issuing two decades of annual forecasts for the collapse of China 'any minute now'. It's not a particularly helpful, or interesting viewpoint. A stopped clock is eventually right, but I wouldn't set my schedule to one. ---- But if you're still confident in this, buy puts. If you're right, you'll be rich in dollars, which might ameliorate some of your losses of internet karma points. If you're wrong, well, I suppose it would imply that the negative karma is deserved.
  - fuzztester 2y ago
    >Doomsayers have predicted 16 of the past 2 recessions 8 out of 1 seems like a pretty good track record, right? (Aside: Psst. Junior, remove my tongue from my cheek, will you?)
- aquamar2 2y ago
  the yen carry trade has apparent unwound around 50% https://www.morningstar.com/news/marketwatch/20240809244/stocks-still-vulnerable-to-further-unwind-of-yen-carry-trade-strategists-say https://www.morningstar.com/news/marketwatch/20240809244/sto.... let's see what happens when the remaining 50% is unwound in the next few months, as investors are selling risky assets in US and Europe (and even riskier assets in China, if they haven't already) and moving cash back to Japan to convert to yen. the world economy will be very volatile until the yen carry trade unwind completes.
- guiambros 2y ago
  > ...HN will deny that the US economy is cratering, I will be downvoted to hell for saying so... You may think you're being downvoted because people disagree that the US economy is cratering. No, I don't think that's the case. You're being downvoted for making unsubstantiated shallow statements, that don't add value or contribute to the discussion. Per the guidelines: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive." Also: "A good critical comment teaches us something." I do think the US economy is in a dire state. Federal spending is the highest point has even been (pandemic aside) [1], our national debt has skyrocketed to $35T, and we're nowhere near having a sane bipartisan conversation during this election cycle. In the best-case scenario, it'll take another 4 years for us to start facing the reality, and then a decade or two to improve it. If you have a robust and unbiased perspective, based on data, I'd love to hear more. And I bet you upvotes will follow (or at least you don't be downvoted). [1] https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/ https://fiscaldata.treasury.gov/americas-finance-guide/feder...
mrbluecoat 2y ago
> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recession. Definitely feels unsustainable.
- willis936 2y ago
  Much like a 21% corporate tax rate (lowest in a century) juicing the deficit to record highs.
  - Pyxl101 2y ago
    Why should there be a corporate tax rate at all though? Why not just tax income and leave it at that? All of the money that corporations earn (and would be taxed on this way) will always be taxed as income before it's distributed to an individual, after all, no? Corporate tax never fully made sense to me.
    - ijustlovemath 2y ago
      Because then they could do accounting to make it look like they're never earning money, and still get taxed nothing.
      - scarmig 2y ago
        The point is that they would be able to earn money without being taxed money anyway. It'd mean fewer accounting tricks, or none. Those would be shifted to individuals. You'd see an uptick in high earners trying to avoid taxes. It's just a question of whether high earners would be better or worse at hiding income than corporations.
      - _heimdall 2y ago
        Taxing income rather than profit would actually account for that. I'm not sure I'd want to see that change, but you can't employ clever accounting to hide income like you can hide profits.
    - 2y ago
firesteelrain 2y ago
Article mentions credit card delinquencies. Taking the contrarian view, how much of that is just bad spending habits vs using it to live/augment income? Another contrarian view, how come people can’t get a second job or better job with more money? I just would like to see more personal accountability. I don’t understand why the taxpayer needs to absorb these loans when the individual took it out on their own assuming it wasn’t predatory or illegal.
- ronsor 2y ago
  Student loans are primarily targeted at an audience that is 16-18 years old. I'd argue this is inherently predatory. The government should simply stop protecting student loan debt from being discharged in bankruptcy. Then lenders will have to take responsibility for their lending actions, universities will have to lower tuition due to less "free" money, and students will have to be more careful with what field they choose. Obviously students shouldn't be pursuing degrees that won't result in a well-paying job, but the lenders are still partially responsible. After all, if you ask a bank for a business loan with a stupid idea, the bank won't give you money, because they know they'll probably lose it. I don't know why it's different with education.
  - loeg 2y ago
    > The government should simply stop protecting student loan debt from being discharged in bankruptcy. Then lenders will have to take responsibility for their lending actions, universities will have to lower tuition due to less "free" money, and students will have to be more careful with what field they choose. This would mostly mean the end of student loans entirely. I don't disagree with the approach, but we should be aware of the tradeoff.
    - spiderice 2y ago
      No, it would be the end of student loans for shit degrees that don’t end up giving the student a career. Doctors, lawyers, engineers, etc.. will still be able to easily get degrees. And the universities will have to lower tuition for those other non-marketable degrees, as they should.
localfirst 2y ago
if Warren Buffet has sold most of his positions and the guy who predicted 2008 subprime mortgage and got rich off it are selling stocks and we have widespread asset bubble poised to correct my question to HN is what do you know better and why aren't you selling all of your stocks? do you believe 2025 is going to be just another year for the bubble? Already the markets have crumbled in China, real estate, stocks, ponzis what makes you think US is immune here? I'm genuinely curious as most HN seem so hostile to comments that suggest stock market and economy goes through cycles of ups and downs and that this one might be the big one.
- reducesuffering 2y ago
  Buffett hasn’t sold most of his positions. He owns more stock than cash. Many people have had your sentiment since 2009. Sometimes it’s true, sometimes it’s not. Meanwhile people holding total stock market are ever wealthier than the bears.
- nwiswell 2y ago
  The expectation return for having your money in equities is lower because of the high valuations, but it's not negative.
- jarsin 2y ago
  Positioned for blow off top and hedged with long duration in case i'm wrong.
- ericmcer 2y ago
  Betting against the market just hasn’t worked since 2008. Outside of the first two months of the pandemic it has steadily climbed regardless of a “recession” coming every year. I don’t think the economy is healthy, I don’t think what we are doing is sustainable, but I will keep all my stocks, betting that it’s going to all go wrong just doesn’t pay.
- djokkataja 2y ago
  There's a lot of psychological factors in markets swinging up and down, and there are always people saying that there's going to be a recession. Also, if you think about HN specifically: if the market is doing well, great. If the market is doing poorly, then cash may be harder to come by, but there's way more upside for growth as the market recovers. Jumping on a fearmongering bandwagon doesn't fit with the entrepreneurial culture of the site.
synergy20 2y ago
Too big to fail, let's bail them out. Too young to take a loan, let's bail them out. Too poor to pay any tax, free ride for you plus food stamps and let's tax the rich more even though the top 5% already paid 66% of all the taxes. I don't know how this is going to end, I'm sure we're all going to hell together though.
- throwgov 2y ago
  [flagged]
gorgoiler 2y ago
Those graphs feel very heartening. Loan delinquency is an awful position to be in and a graph of delinquency dropping to zero feels like a graph of some level of suffering going to zero. I also hadn’t heard / realized the argument that relaxing student loan repayments is bolstering economic health, but I guess it makes sense if you think of it as US government taking $465bn out of the hands of the financial institutions and giving it to their citizens instead, ish. Please disavow me of my economic naivety!
- paulpauper 2y ago
  Sorta. If someone owes a 10 year loan they are making small payments every mouth and future payments are discounted at present value. So it's not at all like a lump sum.
chmod775 2y ago
Given that wealth now is way too concentrated in older generations, who then rent out the ability to exist to younger ones, voiding these loans or government bailouts are a much-needed form of wealth transfer and net-positive to society.
- deepfriedchokes 2y ago
  Refusing to pay would be pretty effective civil disobedience if it gained critical mass.
- _heimdall 2y ago
  It isn't really wealth transfer, this will be paid for in new government debt rather than a tax on the rich. Effectively, the federal government has created a rug akin to Hermione Granger's purse. Whenever they want to spend money but can't increase taxes or decrease spending elsewhere, they sweep it under the infinitely big rug. No wealth transfer, just debt creation on federal books rather than consumer books.

29 points by _7axl 2y ago

deleted 2y ago

[deleted]

As per usual, HN will deny that the US economy is cratering, I will be downvoted to hell for saying so, but "E pur si muove".

ta988 2y ago
Cratering for short, long or indefinite term that's the real question.
boppo1 2y ago
There is room yet to erode the dollar to inflate asset prices. High asset prices equal a strong economy, right?
gedy 2y ago
It's US election time and people go crazy with mental gymnastics to protect their team if they are in power, or exaggerate if the other team is. Not a great time to discuss things objectively.
vkou 2y ago
Doomsayers have predicted 16 of the past 2 recessions, in addition to issuing two decades of annual forecasts for the collapse of China 'any minute now'. It's not a particularly helpful, or interesting viewpoint. A stopped clock is eventually right, but I wouldn't set my schedule to one. ---- But if you're still confident in this, buy puts. If you're right, you'll be rich in dollars, which might ameliorate some of your losses of internet karma points. If you're wrong, well, I suppose it would imply that the negative karma is deserved.
- fuzztester 2y ago
  >Doomsayers have predicted 16 of the past 2 recessions 8 out of 1 seems like a pretty good track record, right? (Aside: Psst. Junior, remove my tongue from my cheek, will you?)
aquamar2 2y ago
the yen carry trade has apparent unwound around 50% https://www.morningstar.com/news/marketwatch/20240809244/stocks-still-vulnerable-to-further-unwind-of-yen-carry-trade-strategists-say https://www.morningstar.com/news/marketwatch/20240809244/sto.... let's see what happens when the remaining 50% is unwound in the next few months, as investors are selling risky assets in US and Europe (and even riskier assets in China, if they haven't already) and moving cash back to Japan to convert to yen. the world economy will be very volatile until the yen carry trade unwind completes.
guiambros 2y ago
> ...HN will deny that the US economy is cratering, I will be downvoted to hell for saying so... You may think you're being downvoted because people disagree that the US economy is cratering. No, I don't think that's the case. You're being downvoted for making unsubstantiated shallow statements, that don't add value or contribute to the discussion. Per the guidelines: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive." Also: "A good critical comment teaches us something." I do think the US economy is in a dire state. Federal spending is the highest point has even been (pandemic aside) [1], our national debt has skyrocketed to $35T, and we're nowhere near having a sane bipartisan conversation during this election cycle. In the best-case scenario, it'll take another 4 years for us to start facing the reality, and then a decade or two to improve it. If you have a robust and unbiased perspective, based on data, I'd love to hear more. And I bet you upvotes will follow (or at least you don't be downvoted). [1] https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/ https://fiscaldata.treasury.gov/americas-finance-guide/feder...

mrbluecoat 2y ago

> [Student loan deferment/forgiveness] is the most likely cause of the continued high consumer spending, which is keeping the economy out of a potential recession. Definitely feels unsustainable.

willis936 2y ago
Much like a 21% corporate tax rate (lowest in a century) juicing the deficit to record highs.
- Pyxl101 2y ago
  Why should there be a corporate tax rate at all though? Why not just tax income and leave it at that? All of the money that corporations earn (and would be taxed on this way) will always be taxed as income before it's distributed to an individual, after all, no? Corporate tax never fully made sense to me.
  - ijustlovemath 2y ago
    Because then they could do accounting to make it look like they're never earning money, and still get taxed nothing.
    - scarmig 2y ago
      The point is that they would be able to earn money without being taxed money anyway. It'd mean fewer accounting tricks, or none. Those would be shifted to individuals. You'd see an uptick in high earners trying to avoid taxes. It's just a question of whether high earners would be better or worse at hiding income than corporations.
    - _heimdall 2y ago
      Taxing income rather than profit would actually account for that. I'm not sure I'd want to see that change, but you can't employ clever accounting to hide income like you can hide profits.
  - 2y ago

firesteelrain 2y ago

Article mentions credit card delinquencies. Taking the contrarian view, how much of that is just bad spending habits vs using it to live/augment income? Another contrarian view, how come people can’t get a second job or better job with more money? I just would like to see more personal accountability. I don’t understand why the taxpayer needs to absorb these loans when the individual took it out on their own assuming it wasn’t predatory or illegal.

ronsor 2y ago
Student loans are primarily targeted at an audience that is 16-18 years old. I'd argue this is inherently predatory. The government should simply stop protecting student loan debt from being discharged in bankruptcy. Then lenders will have to take responsibility for their lending actions, universities will have to lower tuition due to less "free" money, and students will have to be more careful with what field they choose. Obviously students shouldn't be pursuing degrees that won't result in a well-paying job, but the lenders are still partially responsible. After all, if you ask a bank for a business loan with a stupid idea, the bank won't give you money, because they know they'll probably lose it. I don't know why it's different with education.
- loeg 2y ago
  > The government should simply stop protecting student loan debt from being discharged in bankruptcy. Then lenders will have to take responsibility for their lending actions, universities will have to lower tuition due to less "free" money, and students will have to be more careful with what field they choose. This would mostly mean the end of student loans entirely. I don't disagree with the approach, but we should be aware of the tradeoff.
  - spiderice 2y ago
    No, it would be the end of student loans for shit degrees that don’t end up giving the student a career. Doctors, lawyers, engineers, etc.. will still be able to easily get degrees. And the universities will have to lower tuition for those other non-marketable degrees, as they should.

localfirst 2y ago

if Warren Buffet has sold most of his positions and the guy who predicted 2008 subprime mortgage and got rich off it are selling stocks and we have widespread asset bubble poised to correct my question to HN is what do you know better and why aren't you selling all of your stocks? do you believe 2025 is going to be just another year for the bubble? Already the markets have crumbled in China, real estate, stocks, ponzis what makes you think US is immune here? I'm genuinely curious as most HN seem so hostile to comments that suggest stock market and economy goes through cycles of ups and downs and that this one might be the big one.

reducesuffering 2y ago
Buffett hasn’t sold most of his positions. He owns more stock than cash. Many people have had your sentiment since 2009. Sometimes it’s true, sometimes it’s not. Meanwhile people holding total stock market are ever wealthier than the bears.
nwiswell 2y ago
The expectation return for having your money in equities is lower because of the high valuations, but it's not negative.
jarsin 2y ago
Positioned for blow off top and hedged with long duration in case i'm wrong.
ericmcer 2y ago
Betting against the market just hasn’t worked since 2008. Outside of the first two months of the pandemic it has steadily climbed regardless of a “recession” coming every year. I don’t think the economy is healthy, I don’t think what we are doing is sustainable, but I will keep all my stocks, betting that it’s going to all go wrong just doesn’t pay.
djokkataja 2y ago
There's a lot of psychological factors in markets swinging up and down, and there are always people saying that there's going to be a recession. Also, if you think about HN specifically: if the market is doing well, great. If the market is doing poorly, then cash may be harder to come by, but there's way more upside for growth as the market recovers. Jumping on a fearmongering bandwagon doesn't fit with the entrepreneurial culture of the site.

synergy20 2y ago

Too big to fail, let's bail them out. Too young to take a loan, let's bail them out. Too poor to pay any tax, free ride for you plus food stamps and let's tax the rich more even though the top 5% already paid 66% of all the taxes. I don't know how this is going to end, I'm sure we're all going to hell together though.

throwgov 2y ago
[flagged]

gorgoiler 2y ago

Those graphs feel very heartening. Loan delinquency is an awful position to be in and a graph of delinquency dropping to zero feels like a graph of some level of suffering going to zero. I also hadn’t heard / realized the argument that relaxing student loan repayments is bolstering economic health, but I guess it makes sense if you think of it as US government taking $465bn out of the hands of the financial institutions and giving it to their citizens instead, ish. Please disavow me of my economic naivety!

paulpauper 2y ago
Sorta. If someone owes a 10 year loan they are making small payments every mouth and future payments are discounted at present value. So it's not at all like a lump sum.

chmod775 2y ago

Given that wealth now is way too concentrated in older generations, who then rent out the ability to exist to younger ones, voiding these loans or government bailouts are a much-needed form of wealth transfer and net-positive to society.

deepfriedchokes 2y ago
Refusing to pay would be pretty effective civil disobedience if it gained critical mass.
_heimdall 2y ago
It isn't really wealth transfer, this will be paid for in new government debt rather than a tax on the rich. Effectively, the federal government has created a rug akin to Hermione Granger's purse. Whenever they want to spend money but can't increase taxes or decrease spending elsewhere, they sweep it under the infinitely big rug. No wealth transfer, just debt creation on federal books rather than consumer books.