Daily Archives: June 10, 2014

Holy smokes! Eric Cantor loses GOP primary to absolutely unknown, underfunded challenger

The Daily Kos has this story Holy smokes! Eric Cantor loses GOP primary to absolutely unknown, underfunded challenger.

In one of the most shocking primary upsets of all time, House Majority Leader Eric Cantor, the second-ranking Republican in the House, has lost to economics professor Dave Brat, a political unknown who was outspent 40-to-1. Cantor ran multiple attack ads against Brat, but Brat successfully made his outright hostility to immigration reform the centerpiece of the campaign, accusing Cantor of supporting “amnesty” and putting him on the defensive.

This does not appear to be a joke, a satire, or an April Fool’s prank.

Student Loan Servicer Corruption Rewarded, Covered For in New Round of Obama Executive Actions

Naked Capitalism has the story Student Loan Servicer Corruption Rewarded, Covered For in New Round of Obama Executive Actions.

You literally have the Administration going around the servicers to do their job for them, while also paying the servicers more to encourage better performance. And the servicers have already proven themselves to be criminals! Why are they even still in the equation? Why are the same servicers getting the contracts?

(FYI, the last part of the executive memorandum is about stronger financial literacy for borrowers before they take out the loans, and we all know that simply doesn’t work well.)

This is another example of this White House working to prop up a broken, corrupt existing system rather than working to overhaul it. The student loan debate is a sideshow compared to actually reducing the cost of higher ed, as organizer Melissa Byrne so compellingly points out. But trusting the same fraudulent actors in the servicing arena to better serve the customers they bilked, and then covering for them with all these add-on efforts, inspires no confidence that we’ll ever get to the meaningful solutions on the other side.

Well that surely put a quick end to the euphoria of my previous posts Obama Sidesteps Congress to Expand Student Loan Repayment Program and Elizabeth Warren On President Obama’s Relief on Student Loans.

Maybe the refrain from the fraudsters is, “Don’t take it personally.  Trying to cheat you was just business.  This time you can trust us to not look for sneaky ways to make more money.”

Larry Summers Should Keep His Mouth Shut

Baseline Scenario has the article Larry Summers Should Keep His Mouth Shut.

TARP made its first round of investments on Monday, October 13, 2008. As of November 21 last year, TARP was about to turn a paper profit, at least according to the Treasury Department, getting $432 billion back on $422 billion in investments. That’s a 2.4% total return over more than five years, or an annualized return of less than 0.5%. If the government had instead put its money into the stock market on Friday, October 10, 2008, it would have earned a total return of 132% over the same period, or more than 18.3% per year. If Treasury had simply used TARP to buy 5-year Treasury bonds and held them to maturity, it would have earned an annual yield of 2.8%. In short the government only got back “substantially more than it invested” if you ignore the time value of money and risk.

Keep this explanation in mind when ever you hear the story that the Government actually made money on TARP.  After looking at these numbers I went back to a record of my own year end net worth over the last few years and compared to my net worth today.  I chose to use these numbers because I had them readily at hand.

From the end of 2009 to today, my net worth is up 49%.  From the end of 2008 to today, my net worth is up 82%.  Outside of my investments, my only income is Social Security and a very small pension from my days at Digital Equipment Corporation.  So, I am actually spending money from my investments to support my living standard, and yet my net worth is up 82% from the bottom year end value. Compare this to Larry Summers’ record of 2.4% gain.  So that’s why they call him a genius?