And the next bubble to burst could be...

[Bolas 5]

Student loans.

http://finance.yahoo.com/college-education/article/111460/is-the-college-debt-bubble-ready-to-explode

Then again they can't really repo a degree or certification and sell it to someone else or simply erase the info from the person's mind. Yet.

These loans are also being securitized, though an a much smaller scale.

I love the last line, though not sure about the Gates part:

Quote

"Everyone from Barack Obama to Bill Gates keeps pushing a college education as the way to secure one's economic future. That is a view that should be heavily qualified."

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[quade 4]

Student loans have always been a pretty damn good deal all the way around. Businesses benefit quite a bit from a well educated work force.

Ya ask me the next big bust is gold. I especially like how people are "trading" in gold ETFs. That's pretty much lunacy right there. The entire point of gold is to HAVE gold. If you buy and trade ETFs, you don't have it. When they go bust, a lot of folks are going to be fucked.

quade -
The World's Most Boring Skydiver

[kelpdiver 2]

Quote

Ya ask me the next big bust is gold. I especially like how people are "trading" in gold ETFs. That's pretty much lunacy right there. The entire point of gold is to HAVE gold. If you buy and trade ETFs, you don't have it. When they go bust, a lot of folks are going to be fucked.

people trading in gold etfs fear inflation, but not a collapse of the markets. The former is 100 times more likely than the latter.

Also, I believe that actual gold ownership is taxed as a collectable, rather than an investment, so it's taxed at income rates.

(there is still the problem of investing in something that generates no income, and is dug out of the ground)

[quade 4]

Quote

people trading in gold etfs fear inflation, but not a collapse of the markets. The former is 100 times more likely than the latter.

Also, I believe that actual gold ownership is taxed as a collectable, rather than an investment, so it's taxed at income rates.

(there is still the problem of investing in something that generates no income, and is dug out of the ground)

Some gold ETFs are backed by actual gold (similar to the way the US dollar was at one time). However, if you don't actually have the real honest to god gold bullion in your safety deposit box, you don't actually own gold. If something goofy goes down, you own a piece of worthless paper.

Some gold ETFs are entirely mythical and not backed by anything other than some goofy derivative formula based on the price of gold.

Last time we had an instrument like that blow up, it didn't work out too well.

quade -
The World's Most Boring Skydiver

[kelpdiver 2]

to reiterate, ETF investors do not fear market meltdown. There are gold ETFs available that are trusthworthy, and who actually hold gold. iShares iAU is one example. And if you're doing this as a market play, you probably want to go with iShares anyway as their liquidity is far better than average.

[tonyhays 86]

Interesting article on MSNBC about a potential bubble burst...

http://www.msnbc.msn.com/id/40514947/ns/us_news-the_new_york_times/

“That which can be asserted without evidence, can be dismissed without evidence.”

[dmcoco84 5]

Actually... the next bubble to burst will be the commercial real estate market.

If you thought the real estate bubble was bad... buckle up gang!

[NewGuy2005 51]

Quote

Actually... the next bubble to burst will be the commercial real estate market.

If you thought the real estate bubble was bad... buckle up gang!

Did that not burst along with residential real estate?

[dmcoco84 5]

LOL... I wish... its gonna be bad.

[Bolas 5]

Quote

That would force a crisis, since states cannot operate if they cannot borrow.

Why can't a state run off its own revenue sources anymore?

Credit overdoses are going to destroy this country and the world.

For fucks sake, if you don't have the money and don't have a plan to pay it off, don't fucking take the loan.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[GeorgiaDon 350]

Quote

Credit overdoses are going to destroy this country and the world.

For fucks sake, if you don't have the money and don't have a plan to pay it off, don't fucking take the loan.

Back to your initial post about student loans, and according to the article you linked:
"The average debt load is $24,000, according to the Project on Student Debt."
So, it seems the majority of students are able to keep their loan to an amount similar to a car loan. While a college degree is no guarantee of a high-paying job, most professional careers do require extensive education beyond high school. Without a degree, good luck landing a job as a doctor, engineer (of any sort except "sanitation"), scientist of any description, teacher, or in marketing, management, and on and on. Even bank tellers require a business degree these days. What a college education offers is a shot at an interesting career, one that can (hopefully) motivate a person to head off to work every morning and feel good about it, all for the cost of a new car. Of course high school grads or even dropouts might be able to attain the same thing, as long as they have no desire to be an architect, doctor, or find a cure for cancer. Getting rid of student loans would limit such careers to students who come from situations where they already have in place the resources to pay all the costs up front, which for all intents and purposes means wealthy families. Aside from the issue of stifling the ambitions of all but the progeny of the wealthy, do you really think the USA could be economically competitive with the rest of the world under such conditions? You would have this country reduced to hewers of wood and drawers of water. Of course, I recall your disdain for anyone who has actually completed college from another thread; maybe that's the real reason you'd like to see student loans eliminated.

Would you also like to see mortgages eliminated, so only the people with cash in hand could buy property? Mortgages are by far the largest single debt source for the vast majority of people. Hey, if we restrict home ownership to the rich, and voting rights to property owners, maybe we could get closer to your vision of the perfect state.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Bolas 5]

Quote

Quote

Credit overdoses are going to destroy this country and the world.

For fucks sake, if you don't have the money and don't have a plan to pay it off, don't fucking take the loan.

Back to your initial post about student loans, and according to the article you linked:
"The average debt load is $24,000, according to the Project on Student Debt."
So, it seems the majority of students are able to keep their loan to an amount similar to a car loan. While a college degree is no guarantee of a high-paying job, most professional careers do require extensive education beyond high school. Without a degree, good luck landing a job as a doctor, engineer (of any sort except "sanitation"), scientist of any description, teacher, or in marketing, management, and on and on. Even bank tellers require a business degree these days. What a college education offers is a shot at an interesting career, one that can (hopefully) motivate a person to head off to work every morning and feel good about it, all for the cost of a new car. Of course high school grads or even dropouts might be able to attain the same thing, as long as they have no desire to be an architect, doctor, or find a cure for cancer. Getting rid of student loans would limit such careers to students who come from situations where they already have in place the resources to pay all the costs up front, which for all intents and purposes means wealthy families. Aside from the issue of stifling the ambitions of all but the progeny of the wealthy, do you really think the USA could be economically competitive with the rest of the world under such conditions? You would have this country reduced to hewers of wood and drawers of water. Of course, I recall your disdain for anyone who has actually completed college from another thread; maybe that's the real reason you'd like to see student loans eliminated.

Would you also like to see mortgages eliminated, so only the people with cash in hand could buy property? Mortgages are by far the largest single debt source for the vast majority of people. Hey, if we restrict home ownership to the rich, and voting rights to property owners, maybe we could get closer to your vision of the perfect state.

Don

Since this turned into a "name all the next possible bubbles to burst" thread, I was commenting on states that were borrowing versus raises taxes to make up the shortfall, though it is good advice for everyone.

As for student loans, they should still be offered and people should still go to school if they want, but they should have some sort of idea how they'll pay them back AKA "a plan to pay it back."

If the career one is planning to go into starts at a very low salary, perhaps they should figure out how to get out of school with less debt than someone who is going into a field that starts higher.

The article also mentions that education costs are going up so while car equivalent student loans may now be the norm, 6 figure loans may become more common.

Additionally, if defaulting laws on student loans change, introducing higher risk for the lenders, you may start to see different loan rates based on field of study.

As for mortgages, it too is all about having a plan to pay it off, not just making the smallest payment possible for the biggest mortgage one can get.

Credit itself is not a bad thing in moderation but if one, a gov't, or a business is using it consistently to maintain a level above their current means, with no plan other than to get more credit, that's when the trouble starts.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[Casurf1978 0]

Quote

Student loans have always been a pretty damn good deal all the way around. Businesses benefit quite a bit from a well educated work force.

I agree, but it seems we've turned higher education into a money making system. I was reading in the NY times that since 1982 college tuition has increased close to 500%, while the medium family income about 150%. Just as example UCLA for residents is 21K-27K per year for non-residents its 44K-50K. How can a typical family afford to send one kid to college.

[quade 4]

Quote

I agree, but it seems we've turned higher education into a money making system. I was reading in the NY times that since 1982 college tuition has increased close to 500%, while the medium family income about 150%. Just as example UCLA for residents is 21K-27K per year for non-residents its 44K-50K. How can a typical family afford to send one kid to college.

And UCLA is an exceptionally good bargain for those prices. #24 school in the country, well respected and subsidized by the state.

Contrast that with its cross-town rival USC which is also an excellent school but the costs there are astronomical by comparison. Not to mention, it's a shit hole part of town to live in.

But, yes, education costs money. Higher education and better schools have always costed more than most people can afford. That was the beauty of the UC system and making it as inexpensive as possible. Unfortunately, the state budget crisis has caused costs to go up.

quade -
The World's Most Boring Skydiver

[kallend 1,793]

Quote

Quote

Student loans have always been a pretty damn good deal all the way around. Businesses benefit quite a bit from a well educated work force.

I agree, but it seems we've turned higher education into a money making system. .

It's certainly sad that faculty expect to be paid at the end of the month. (It's not at all uncommon for a freshly graduated PhD in engineering to be paid a starting salary MORE than the faculty who taught him/her make).

...

The only sure way to survive a canopy collision is not to have one.

[kallend 1,793]

Quote

Quote

Quote

Credit overdoses are going to destroy this country and the world.

For fucks sake, if you don't have the money and don't have a plan to pay it off, don't fucking take the loan.

Back to your initial post about student loans, and according to the article you linked:
"The average debt load is $24,000, according to the Project on Student Debt."
So, it seems the majority of students are able to keep their loan to an amount similar to a car loan. While a college degree is no guarantee of a high-paying job, most professional careers do require extensive education beyond high school. Without a degree, good luck landing a job as a doctor, engineer (of any sort except "sanitation"), scientist of any description, teacher, or in marketing, management, and on and on. Even bank tellers require a business degree these days. What a college education offers is a shot at an interesting career, one that can (hopefully) motivate a person to head off to work every morning and feel good about it, all for the cost of a new car. Of course high school grads or even dropouts might be able to attain the same thing, as long as they have no desire to be an architect, doctor, or find a cure for cancer. Getting rid of student loans would limit such careers to students who come from situations where they already have in place the resources to pay all the costs up front, which for all intents and purposes means wealthy families. Aside from the issue of stifling the ambitions of all but the progeny of the wealthy, do you really think the USA could be economically competitive with the rest of the world under such conditions? You would have this country reduced to hewers of wood and drawers of water. Of course, I recall your disdain for anyone who has actually completed college from another thread; maybe that's the real reason you'd like to see student loans eliminated.

Would you also like to see mortgages eliminated, so only the people with cash in hand could buy property? Mortgages are by far the largest single debt source for the vast majority of people. Hey, if we restrict home ownership to the rich, and voting rights to property owners, maybe we could get closer to your vision of the perfect state.

Don

Since this turned into a "name all the next possible bubbles to burst" thread, I was commenting on states that were borrowing versus raises taxes to make up the shortfall, though it is good advice for everyone.

As for student loans, they should still be offered and people should still go to school if they want, but they should have some sort of idea how they'll pay them back AKA "a plan to pay it back."

If the career one is planning to go into starts at a very low salary, perhaps they should figure out how to get out of school with less debt than someone who is going into a field that starts higher.

The article also mentions that education costs are going up so while car equivalent student loans may now be the norm, 6 figure loans may become more common.

Additionally, if defaulting laws on student loans change, introducing higher risk for the lenders, you may start to see different loan rates based on field of study.

As for mortgages, it too is all about having a plan to pay it off, not just making the smallest payment possible for the biggest mortgage one can get.

Credit itself is not a bad thing in moderation but if one, a gov't, or a business is using it consistently to maintain a level above their current means, with no plan other than to get more credit, that's when the trouble starts.

We should expect bankers to be more financially savvy than the average college student or first time homebuyer. Why then is it that the banks used pressure to get homebuyers to take out NINJA loans, and make the default payment on credit card debt the absolute minimum?

...

The only sure way to survive a canopy collision is not to have one.

[Bolas 5]

Quote

Quote

Quote

Student loans have always been a pretty damn good deal all the way around. Businesses benefit quite a bit from a well educated work force.

I agree, but it seems we've turned higher education into a money making system. .

It's certainly sad that faculty expect to be paid at the end of the month. (It's not at all uncommon for a freshly graduated PhD in engineering to be paid a starting salary MORE than the faculty who taught him/her make).

Engineering has always been the exception. As engineering schools tend to have partnerships with various companies, some cost colleges very little or no money or are even a profit center for the school.

How many other fields of study/degrees does that apply to? How many others are less? How many are FAR less?

This is the type of analysis that needs to be done if it hasn't already. There's nothing wrong with getting any degree in any field but some just don't appear to be as cost effective as others.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[kelpdiver 2]

Quote

It's certainly sad that faculty expect to be paid at the end of the month. (It's not at all uncommon for a freshly graduated PhD in engineering to be paid a starting salary MORE than the faculty who taught him/her make).

If that is true, it's seems unlikely that faculty salaries have anything to do with college costs increasing 3x faster than the country in general.

[billvon 2,673]

>For fucks sake, if you don't have the money and don't have a plan to pay
>it off, don't fucking take the loan.

Problem is that no one takes a loan they can pay off. They take it in the hopes that things will go their way in the future.

No medical student can pay off their student loans using their salary as a resident. They hope to make much more money in the future, by getting a job they haven't even applied for yet, much less interviewed for.

Few homebuyers can afford to pay off their mortgage when they first get it. They hope to make more money as time goes on. This is usually a safe bet since salaries tend to go up.

Borrowing is always a risk. When the risk pays off the risk taker is rewarded and held up as a genius of wise investment. When it doesn't they are idiots. The benefits generally outweigh the negatives, though, which is why it happens often (and why defaults are such a problem when the economy goes bad.)

[StreetScooby 5]

Quote

Ya ask me the next big bust is gold. I especially like how people are "trading" in gold ETFs. That's pretty much lunacy right there. The entire point of gold is to HAVE gold. If you buy and trade ETFs, you don't have it. When they go bust, a lot of folks are going to be fucked.

I know people who will disagree with you here. One friend of mine is making a big play in secondary gold stocks, and it's been working out for him. He got in a long time ago and has held his position.

We are all engines of karma

[Bolas 5]

Quote

>For fucks sake, if you don't have the money and don't have a plan to pay
>it off, don't fucking take the loan.

Problem is that no one takes a loan they can pay off. They take it in the hopes that things will go their way in the future.

No medical student can pay off their student loans using their salary as a resident. They hope to make much more money in the future, by getting a job they haven't even applied for yet, much less interviewed for.

Few homebuyers can afford to pay off their mortgage when they first get it. They hope to make more money as time goes on. This is usually a safe bet since salaries tend to go up.

Borrowing is always a risk. When the risk pays off the risk taker is rewarded and held up as a genius of wise investment. When it doesn't they are idiots. The benefits generally outweigh the negatives, though, which is why it happens often (and why defaults are such a problem when the economy goes bad.)

When you say no one takes a loan they can pay off do you mean no one takes a loan they can easily afford the payments at their current salary?

For student loans, that is true and acceptable, but for all other loans, having loan payments for cars, boats, houses, etc. that total, near, at or above your current income is not smart.

Even if one makes more in the future, rather than use that additional to "catch up" they will likely just borrow and purchase more and continue to live at, near. or over. their new income as well.

Additionally they will also have 0 savings so while a "rainy day" could hurt them badly, even a "light shower" could cause big issues.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[Bolas 5]

Quote

We should expect bankers to be more financially savvy than the average college student or first time homebuyer. Why then is it that the banks used pressure to get homebuyers to take out NINJA loans, and make the default payment on credit card debt the absolute minimum?

Who says they aren't? It's all about the goal of the banker. Which is usually the quick buck.

If all they're doing is selling the loans they get to another bank, they're have 0 concern over whether the person pays the loan back, just if they can sell it or not. The company that buys the loan has some concern but as long as they get their initial $$$ back plus whatever percentage they deem to consider it profitable (in standard interest and/or penalty fees) they're happy too and may sell the remainder to yet another org who as well are looking for a certain percentage over their purchase price.

Bankers are extremely financially savvy, but that saviness is generally in their companies best interest first, not the customer.

Caveat emptor.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[billvon 2,673]

>For student loans, that is true and acceptable, but for all other loans,
>having loan payments for cars, boats, houses, etc. that total, near, at or
>above your current income is not smart.

Well, very few people do _that_ - but many people have loans that are very hard to pay back. They justify it by thinking they will 'flip' the house before the payments become crushing, or their company will make it big before the debt becomes unmanageable.

This is, of course, a bad idea if the goal is to avoid crushing debt. But during good economic times it works more often than it doesn't - which means that _not_ doing it puts you at an economic disadvantage.

That's the problem. These people weren't doing something that is universally destructive. They were doing something that, until the market collapsed, made people millions. Which is why it's attractive.

[PiLFy 0]

We should expect bankers to be more financially savvy than the average college student or first time homebuyer. Why then is it that the banks used pressure to get homebuyers to take out NINJA loans, and make the default payment on credit card debt the absolute minimum?

[Bolas 5]

Quote

>For student loans, that is true and acceptable, but for all other loans,
>having loan payments for cars, boats, houses, etc. that total, near, at or
>above your current income is not smart.

Well, very few people do _that_ - but many people have loans that are very hard to pay back. They justify it by thinking they will 'flip' the house before the payments become crushing, or their company will make it big before the debt becomes unmanageable.

This is, of course, a bad idea if the goal is to avoid crushing debt. But during good economic times it works more often than it doesn't - which means that _not_ doing it puts you at an economic disadvantage.

That's the problem. These people weren't doing something that is universally destructive. They were doing something that, until the market collapsed, made people millions. Which is why it's attractive.

Not spending more than one has does not put them at an economic disadvantage. It puts them at a greater advantage because since they are not maxed out, have credit available if needed.

Of those that "flipped" their primary residence, how much actual money did they really make once all the expenses such as moving, real estate and mortgage fees, home improvements, plus paying off the loan and its interest? And did they take that $$$ or just put it into the next "flip?"

I could see having a variable rate on a second home or homes purchased as investment properties, even can see it as an option on "toys" such as boats, RVs, luxury cars, sports cars, etc. Worst case, you lose some toys and/or real estate.

Doing it on your primary vehicle and/or residence though is just retarded.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.