The Great Education Scam gets widespread attention

We've been talking about the Great Education scam for a year and a half.

The theme is catching on with other bloggers and in the mainstream media. Today Instapundit's Glenn Reynolds writes an op-ed in the Washington Examiner, citing recent stories in the Washington Post and New York Times:

First -- as with the housing bubble -- cheap and readily available credit has let people borrow to finance education. They're willing to do so because of (1) consumer ignorance, as students (and, often, their parents) don't fully grasp just how harsh the impact of student loan payments will be after graduation; and (2) a belief that, whatever the cost, a college education is a necessary ticket to future prosperity.

Bubbles burst when there are no longer enough excessively optimistic and ignorant folks to fuel them. And there are signs that this is beginning to happen already.

Indeed.

On the other hand, if you can get a fixed-rate student loan, maybe you'll get lucky with a dollar collapse in a few years. That's my strategy for real estate debt, and it would apply to college debt as well. But if we're wrong and don't get a dollar collapse, college debtors are far worse off than mortgage debtors. You can walk away from a house and go bankrupt to clear other debts, but college debt is bankruptcy-proof and will be a ball and chain until your dying day.

Help a sister out

Friend of this blog JenO is doing a worthy fundraiser walk for the American Society for Suicide Prevention. With the fundraising deadline looming, she's had a tough go and needs $850 more. Let's put her over the top.

You can donate here.

Come on, with Alan Greenspan still on the loose, we need all the suicide prevention we can get. And it's tax deductible, meaning Barry O will pick up thirtysomething percent of your donation and if you're unfortunate enough to live in California, the Taxinator will pick up another 10%. That's like getting an almost 1-for-1 match!

Richard Fisher on fake financial reform, the Dirty Fed, and TBTF

Dissent within the Dirty Fed! Someone gets it on Too Big To Fail:

Big banks that took on high risks and generated unsustainable losses received a public benefit: TBTF support. As a result, more conservative banks were denied the market share that would have been theirs if mismanaged big banks had been allowed to go out of business. In essence, conservative banks faced publicly backed competition.

Let me make my sentiments clear: It is my view that, by propping up deeply troubled big banks, authorities have eroded market discipline in the financial system.

The system has become slanted not only toward bigness but also high risk. Consider regulators’ efforts to impose capital requirements on big banks. Clearly, if the central bank and regulators view any losses to big bank creditors as systemically disruptive, big bank debt will effectively reign on high in the capital structure. Big banks would love leverage even more, making regulatory attempts to mandate lower leverage in boom times all the more difficult. In this manner, high risk taking by big banks has been rewarded, and conservatism at smaller institutions has been penalized. Indeed, large banks have been so bold as to claim that the complex constructs used to avoid capital requirements are just an example of the free market’s invisible hand at work. Left unmentioned is the fact that the banking market is not at all free when big banks are not free to fail.

It is not difficult to see where this dynamic leads—to more pronounced financial cycles and repeated crises.

Ha! But common sense like this from a lone Fedster will never prevail against Wall Street lobbyists' cash with the likes of Dodd (D - Countrywide) and Frank (D - Fannie Mae) in charge.

The brighter side of Big Brother

Hey, if we didn't have all these government cameras around recording us all the time, we'd miss moments like this.



In related news, while the cops can always record you, you might be arrested for recording the cops.

American Idiot

Left Coast Rebel points out that two thirds of Americans can't name a single Supreme Court Justice.

I'd like to turn this issue on its head and ask why should the whims of Justices be so important in our lives that we should need to know their names. The Constitution set out rights of individuals and restrictions on the powers of government to meddle in our lives. I think the founders would be horrified to learn that Washington power is so all-encompassing in our daily lives that we follow every Presidential and Congressional election and every Supreme Court nomination as if our livelihoods depend on them (which they do, in Obama Nation, of course!).

Free Rent Nation

Here at the WCV, we've been advising underwater homedebtors to stop paying their mortgages for years.

May 2008:

If your loan balance exceeds your home's value, stop paying your mortgage immediately. Remember, in the Bernanke/Pelosi/McCain world, the responsible get screwed, and the reckless get rewarded. If you stop paying your mortgage, your bank will either voluntary renegotiate the terms, or Congress will force them to do it. If you keep paying on an underwater house, you're just throwing good money after bad.

October 2008:

You've already saved ten or twenty thousand dollars, and have you noticed that the bank is still not bothering you? Keep living rent-free. When the bank (or government) finally does get around to calling you, they'll be very nice and accommodative, and they'll negotiate a very nice principal reduction for you.

May 2009:

If the banks are going to delay foreclosure for at least a year due to political pressure, operational capacity, or a desire to delay loss recognition, you might as well take advantage of it, stop paying your mortgage, and live free for a year. [...] Honey, I stopped paying the mortgage! Let's go to Disney World!

June 2009:

In Bailout Nation, only the stupid honor their obligations. [...] If you still are paying your mortgage or credit card balances, look around the room. YOU are the sucker!

Today the New York Times published a story about the joys of not paying: Owners Stop Paying Mortgages, and Stop Fretting.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

And Angry Future Expat has more thoughts on the subject today.

Voters' guide to California and San Diego propositions

Last week we gave our picks for the June primary ballot.

Today, our friend and local Tea Party founder Leslie Eastman gives her picks.