Student Loans, Housing and Poverty in the U.S.

Mar 11, 2013

“Bottom Line: Foreclosures need to stop, student loans need to be modified and return to pre-2005 rules for dischargeability, wages need to rise and the number of people earning wages needs to rise. If you don’t have those ingredients, the economic “recovery” will forever be fragile and will forever be in danger of a much deeper collapse than we saw in 2008 because underlying conditions are worse. That’s why American companies are holding trillions in cash and assets overseas. They don’t trust us anymore.” — Neil F Garfield, livinglies.me

For assistance with presenting a case for wrongful foreclosure and student loans, please call 954-495-9867 (East Coast) 520-405-1688 (West Coast), customer service, who will guide you to our information resources and upon request put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Analysis: According to the official figures there are around 50 million people living below the poverty line. Surveys show that the number of people who can’t buy essentials for their family actually total close to 150 million people, which is half the country. The unemployment rate, if one were to add the number of people who are underemployed or who have given up looking for work, is probably over 20% — 60 million people!

The chasm referred to as income and wealth inequality is growing daily. $1 trillion in debt burdens students who could be far more productive. Until 2005, this debt was dischargeable in bankruptcy. But the banks managed to get changes made in the bankruptcy code equating student debt with alimony and child support and further requiring means testing in chapter 7 thus inhibiting the discharge of debts on credit cards charging 20% or more per year in interest and medical costs, which if you read Brill’s article in Time Magazine last week, are marked up 3000%.

Some $13 trillion in mortgage loans were faked and the banks continue to lie to the President, the Congress, the state legislatures, governors and Attorneys general.

If you add it all up, it isn’t hard to see why economists refer to the “recovery” as fragile. If you ask me it is unjust, wrong and impractical to continue on the same path we are on in the hopes that down the road somehow we will grow out of the problem we have — an economy that benefits a few people while the number of people falling behind, with lower and lower wages and decreased accessibility to credit increasing every month. Billions are added each month in student loan debt which is fast becoming a cancer on our society simply because of the new bankruptcy provisions.

The 7 year experiment in making student loans non-dischargeable is a miserable failure. It is a major contributor to the impending decline in the credit rating of the what was once the strongest nation on earth in every way. Because we allowed the banks to get the TARP funds and all the other forms of bank bailouts, and because we ignored the real victims — the investors and the homeowners who were tricked into deals that could not possibly work, the foundation of the country has been so undermined that we now rank #10 behind France and Spain in upward economic mobility. That means that the chances are better in those countries to climb the ladder of success than they are here.

This is not a piece suggesting we convert to socialism as our economic path. It is rather a call-out to our government that it cannot continue to bow to the will of the banks and expect the country to hold together. With half the country gasping for air, we must jettison our ideology and go for the practical solutions — most of which already exist or existed until a short while ago.

The problem is not that capitalism isn’t working. The problem is that capitalism is being used as a cover for the creation of illusions of prosperity and the reality of a near fascist state. That is what happens when someone corners the market on oranges and that is what happens when the someone is allowed to corner the market on money. And THAT is why we need government regulators and legislators who are NOT permitted to go through the revolving door from government to business and back again. If you take the referees off the field, don’t be surprised with what happens next.

For better or worse our economy is still 70% dependent upon consumer spending. Yet we pursue policies that diminish the ability of consumers to spend and diminish the number of consumers. The fact that there is still some muscle in the our system is testament to our inner strengths and prospects if we make the necessary changes to our democratic institutions and reign in those who are admittedly too large to govern or regulate.

Despite the obvious fundamental defects in the loan originations and transfers of loans that were the products of imagination and illusion, we treat them as real and even sacred. The playing field has been tilted so that all the benefits roll into one corner while the rest of us scramble to make ends meet. The risk factors in any loan or program have been pushed entirely over into the public sector when the government should be able to stop the foreclosures, cure the student defaults and renew the progress of wage growth.

The keys to end this nightmare here and abroad is housing, student loans and employment. Students who have unpayable student loans are refused employment because many employers do credit checks. The same holds true for the millions of Americans who have been victims of fake foreclosures by strangers who never put up a dime to fund or purchase the loan and then submitted a credit bid at the “auction.” The private student loans arose because somebody thought it was a good idea to raise the cost of student loans by inserting profit seeking banks as intermediaries. Now that is corrected as to future loans, but it does nothing to correct the problems of past mistakes by government.

This isn’t just theory. Trillions of dollars are being held off shore by companies who legitimately are not convinced that the U.S. will actually pull out of this spiral anytime soon. So they are investing in capital and labor elsewhere. No effort has been made to claw back the trillions of dollars that disappeared in the maelstrom of the mortgage meltdown. Those funds are hidden off shore too.

And even more importantly, no company wants to invest in a marketplace where the laws are not enforced with consistency. If you speak with many CEO’s in private they will tell you that jail time for bankers would be a stimulus to confidence in the U.S. marketplace. What we have is a marketplace without boundaries as to the the fraud and other criminal behavior that was never before tolerated in our system.

Large and medium sized organizations holding trillions of dollars in liquid assets and other investments overseas see this very clearly. They have no more reason to commit to the U.S. economy than they do to any other banana republic.