Daily Archives: June 9, 2014

Obama Sidesteps Congress to Expand Student Loan Repayment Program

This US News story Obama Sidesteps Congress to Expand Student Loan Repayment Program has a little more depth to it than i have read so far.

As a service to readers of this blog, I’ll quote this one snippet from the article.

Currently, the Pay As You Earn income-based repayment option, which began in December 2012, is not available to students with older loans – those who borrowed before October 2007 or those who have not borrowed since October 2011. But an analysis the Consumer Financial Protection Bureau published in October shows many income-based repayment plans are underutilized: Fewer than 50,000 borrowers were enrolled in the Pay As You Earn program. Experts have said many students don’t enroll in the programs because they are confused about the process or are simply unaware of their options.

If you have a student loan and were not aware of this, then this might be something to investigate. I don’t remember when I paid off my student loans, but it must have been in the 1970s. I don’t know any of the details of the process now.

Elizabeth Warren On President Obama’s Relief on Student Loans

Elizabeth Warren just posted a comment on the recent signing by President Obama of student loan relief.

Proud to have a front-row seat for President Obama’s important announcement for America’s students today. Now it’s time to pass the Bank on Students Act!

I added my standard reminder as a comment.

Just remember that the United States Federal Government does not need to raise taxes to pay for its programs. The Fed proved this when they created trillions of dollars out of thin air to bail out the banks without even causing inflation.

So what is this silly idea of Republicans that every new expenditure must be “paid” for by corresponding changes to the budget elsewhere. It can always be “paid” for by the Fed creating the money to pay for it. The government doesn’t even have to borrow its own currency to pay for it.

I was just thinking that if we took advantage of this understanding of financing federal government expenditures, we would still keep track of the balance of taxes collected and dollars spent.  For control of the budget and the economy we need to know if we are running a deficit or a surplus, or a perfect balance.  However, the deficit does not need to be financed by debt.  The yearly deficit or surplus would be whatever it was, but it would not be tied to the level of Treasury securities outstanding.

The only reason to offer Treasury Securities to the public is to give people a safe place to put their money where we are even kind enough to pay them interest for taking their money out of circulation and letting us hold onto it for them.

If the public tries to park too much money with the Treasury, we could even charge them interest for our holding it for safe keeping.  After all, what sense does it make for the FED to be trying with all its might to pump liquidity into the economy, and then we take back that liquidity and pay people for giving it back to us in the form of letting them keep an account at the Treasury?  Buying Treasury securities is akin to putting money into a savings account at a bank.  One difference is that the banks use the deposits to shore up their stability while they make loans with a good fraction of that money.  The federal government does not need to be given back its own currency.  It is much cheaper for our government to make all the money it needs rather than pay people to give them back the money they have already created.

Target: Create Gun Sense Policies in Your Stores

There is a petition you can sign titled Target: Create Gun Sense Policies in Your Stores.

The web page at the above link with the petition quotes The Wall Street Journal as saying:

Target, which boasts on its website that between 80% and 90% of its customers are women, has no restrictions on customers carrying guns in its stores.

As a new stock holder in Target, I figure I should have some say in their policies.  If the petition page had allowed me to, I would have sent them a copy of my sign that Target could post at their front door, and on the their web site.

Warning We Shoot First Poster

Well, I just took my own advice. I sent a copy of this poster to Target’s Investor relations department. investorrelations@target.com

Larry Summers’ Contradictory and Dishonest Defense of Administration’s Bank-Focused Crisis Response

Naked Capitalism has the article Larry Summers’ Contradictory and Dishonest Defense of Administration’s Bank-Focused Crisis Response.

If you are going to succeed in rewriting history, a necessary condition is that the public doesn’t remember it very well. Unfortunately, that requirement is not in place for the architects of the Administration’s blatantly bank-friendly crisis responses.

This article gives a very thorough description of why I am so upset with the way the Obama administration has handled the financial crisis.

Adam Levitin, Georgetown law professor and special counsel to the Congressional Oversight Panel, has a more detailed takedown of the Summers article. Levitin, a bankruptcy expert, objects strenuously to Summers claiming that he [Summers] supported “cramdown”. In all other types of collateralized consumer lending, when a borrower is in bankruptcy, the loan is written down to the value of the collateral and the rest is treated as unsecured and written down based on how much the borrower has left to pay off all unsecured loans. Cramdown was seen by supporters as the best way to cut the Gordian knot of considerable complications and bad incentives impeding the restructuring of mortgages.

Remember that Elizabeth Warren was head of the Congressional Oversight Panel (COP). As a bankruptcy expert herself, you can imagine how upset she must have been that the administration and Congress essentially ignored the advice COP was giving at the time.

Summers and Geithner are still trying to deny how little they understood the history of successful solutions to financial crises in the past.