Posts Tagged ‘business’

Student Loan #Debt & The #Education Bubble

Posted: March 6, 2014 in Excess and Algorithms
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eanda logoajclogo2

by @anarchyroll
3/5/2014

A lot has been written about student loan debt, but apparently not a lot of research has been done into the subject. The Department of Education releases default rates once a year, but that is just about it. Are you surprised at this? So was the New York State Federal Reserve Bank. Two analysts working their essentially had to do a bulk of the research that is now often cited by the media and protest groups.

They found that the percentage of 25-year-old college graduates with student loan debts essentially doubled while the average loan balance increased 91% from 2003 to 2012.

Economists are looking at education borrowing as the next bubble that could burst and drag down the US economy along with it. Much like the housing bubble, there are a lot of government backed loans being given away with a rubber stamp to large amounts of people who are unable to immediately if ever repay. Government officials are openly comparing student borrowing to the mortgage-backed security crisis of 2008. And remember, this article opened with the fact that there has been little study and even less data available on the subject.

Mortgage backed securities, credit default swaps, and derivatives trading are all complicated things. Let’s keep the education bubble concept simple.

Student loan debt in America = $1.2 trillion (with a T) more than any other form of consumer debt.

Much like the series of articles written about quantitative easing (QE), there will be multiple articles written about student loan debt as well as the debate over raising the minimum wage. These are the three economic issues I feel most passionately about and wish to shine light upon. Let those numbers listed above wash over you for a bit. Do you know anyone dealing with student loan debt? How are they doing? What is their quality of life?

It’s not just the loan or the interest, it is the unemployment, underemployment, or complete non-existence of careers in the fields thousands if not millions of students are graduating with each year. It’s not just the monthly payment on the loan(s). It’s the monthly payment on the loan plus rent, utilities, food, transportation, etc.

The Education Bubble and the student loan debt crisis are one and the same. They are intertwined, they are two terms describing essentially the same thing.

How is higher education a bubble akin to the dot-com, real estate bubbles, and other asset bubbles? We’ll cover that in part 2…

#TaxCode Changes Put on the Table

Posted: March 1, 2014 in Excess and Algorithms
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eanda logoajclogo2by @anarchyroll
2/27/2014

There are very few things that can actually change the American and/or global economy. The reason there are few things is because each one is not just big but gigantic in scope, nature, and application apparatus. A overhaul of the US tax code has been proposed by Michigan Republican David Camp of Michigan.

The banks hate it, retailers love it, Democrats say it’s dead on arrival, and Republicans aren’t really saying anything since it involves raising taxes on top earners. But it is a start, it is a physical, tangible bill, put on the table. The White House has acknowledged at least that much.

Many tax exemptions and tax breaks would be eliminated. Taxes would go down for individuals but go up for companies and corporations that earn X number of dollars. Income earned from investments would be taxed more which is very important. But there are multiple aspects that will prevent it from going anywhere, but it’s a start.

979 pages, which is the length of the bill, doesn’t exactly scream…simplified. But there must be a starting point on this issue, there must. The tax code in the United States is ridiculous and causes more problems than it solves. It favors the rich and hurts the poor. Too much money is hidden, sheltered, and shipped offshore, all of which must end.

Warren Buffet has famously said he should not pay a lower marginal tax rate than his secretary. The fact that is currently the norm, tells you all you need to know about the current tax code and tax policy in the United States. David Camps starting point is truly nothing more than a starting point but you can’t walk before you crawl. Camp’s bill begins the crawl forward, and forward is always the way to go.

#MoneyVelocity ; The Economic Recovery’s Gas Pedal

Posted: February 21, 2014 in Excess and Algorithms
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eanda logoby @anarchyroll
2/20/2014

What is money velocity? It is the speed at which the M2 money supply moves from one transaction to another.  What is the M2 money supply? It is all the liquid cash assets in the country from cash, savings accounts, mutual funds, certificate of deposits (CDs), checking deposits, or basically any kind of money stored in any kind of account, or mattress if you’re old and senile.

How can money velocity be used to gauge economic strength? Because money velocity ends up being the ratio of the size of a country’s economy to the size of the money supply. So there shouldn’t be more cash than there is gross domestic product (GDP) or less than. If there is more/less, then inflation/deflation occurs as a market correction.

I may sound very smart with the above explanation, but a recent article in Bloomberg Businessweek did all the heavy lifting for me. The article is short, quick, to the point, and keeps everything in plain language, as I try to do with this blog.

The concept of money velocity fascinated me because; I had never even heard or come across the term before, was unaware it is a relatively accurate economic indicator, and was surprised that the slower money moves the safer we are from inflation or another recession. Why is that? Hasn’t the Fed been flooding the markets with freshly printed money for over three years? They have, but people and businesses aren’t spending it, they’re saving it. Which is good for now because inflation could stop the economic recovery in its tracks.

But the money will have to start flowing sooner than later. Especially as QE gets tapered off over the next 18 months. Fading out QE and fading in inflation wouldn’t do much damage to the economy. It would be like getting autumn before winter or spring before summer, our bodies acclimate to the changing weather because of a gradual transition. This could be the case with money velocity. It was refreshing to learn that the low money velocity we are seeing now is historically normal, and has in the 60s and 80s preceded boom periods.

But those booms were just bubbles. We all must keep one eye on Wall Street to make sure that our country isn’t held hostage by a bursting bubble again. That is why they teach consumer ed in high schools folks, it’s not just to give an elective teacher a pay bump.

So now you know what money velocity and M2 money supply are. It’s used as an economic indicator because of its ratio to GDP. Lower velocity means lower prices and deflation while higher velocity means higher prices and inflation. Drop those in conversation at the cocktail lounge but not the night club, depending on how fast you want to move the cash in your wallet to keep the other parties interested…

#Verizon Donates 8 Hours of Revenue

Posted: February 9, 2014 in Excess and Algorithms
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eanda logoby @anarchyroll
2/9/2014

$100 million dollars is a lot of money. A big round number that looks especially good in a press release touting charitable contributions. When a company makes $4.6 billion each financial quarter however, that $100 million sounds a little less charitable. When the people receive the charity are saying they don’t need the money, they need better infrastructure and a cheaper bill, well, welcome to America.

In an excellent piece written for the  Washington Post, Brian Fung very politely writes why the nine figure monetary donation is bullshit. Again, he puts it much more politely than I. After all, what good are a bunch of iPads if the school either doesn’t have broadband or can’t afford it? Which is plenty of schools, not just the ones in the ghettos are facing.

Have you noticed your internet bill going down in the last decade? Exactly, imagine what a municipal internet bill is. No such thing as a free lunch. If we charge people to not die of cancer, what hope do kids who want to save their homework to the cloud have?

Good thing we have a socialist, liberal, communist, democratic president in office whose going to stick it to the billion dollar corporations to help the schools out right? Spoiler alert, Obama has is a moderate conservative. Nothing has been asked or demanded of the telcomm companies to provide free or even discounted rates on new infrastructure or service to schools in rural areas of America or in impoverished urban areas either (both of which still run on dial up in some cases).

$100 million is a lot of money, but when that is how much money is made in 8 out of 8,765 hours of operation, it’s a token gesture meant to distract and distort. Nothing more, nothing less. Not to mention we haven’t talked about the students who go to school starving for food, not for playing Candy Crush during home room.

End of #NFL Season, End #NFL Tax Exempt Status?

Posted: February 4, 2014 in Excess and Algorithms
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sportsrolleanda logo
by @anarchyroll
2/4/2014

Did you know the NFL makes $9 billion in net profits each year and pays ZERO dollars in taxes?  How? They are classified as a 501(c)(6) trade organization, which enables tax exempt status.  When did they get this sweet hart deal? Back in the 60s. Were the politicians who enabled this high on dope like the hippies? No, just corrupt as hell.  The NFL spends $1.5 billion each year lobbying to maintain their tax exempt status.

Why was this allowed? The NFL was allowed to act as a monopoly in terms of their trade organization status, television contract negotiations, and stadium funding negotiations in exchange for not running games against high school and college games.

What is being done about this? The Properly Reducing Overexemptions For Sports Act has been introduced to the United States Congress. Who? Republican Senator Thomas Coburn of Oklahoma and Independent Senator Angus King are cosponsoring the bill. The bill is presently sitting in the Senate Finance Committee, where it has been since September of last year (2013).

The concept of the NFL not paying any taxes is of course, bullshit. The bill that gave them this status was given no name in order to keep it secret. Individual teams already get tax breaks to build their stadiums and get sweetheart deals to avoid property taxes on them as well as their practice facilities.  The only exemption that may allowed to remain would be the Green Bay Packers, who are publically owned by the town/city.

$9 billion a year annually means they can afford to pay a nominal tax rate. No need to go crazy socialist on the league.  1-5% per individual team in addition to off the top of the league as a whole will be more than sufficient to start. Now, should a back taxes penalty be paid? Considering all the charitable contributions of the league makes each year, that might not be necessary.

But when a Republican United States Senator is proposing a bill that raises taxes, I think we can all agree that the time has come for the NFL to pay their fair share of revenue and help state and federal governments build roads, schools, firehouses, police stations, and libraries.

Click here to sign online petition to revoke the NFL’s tax exempt status.

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