Blog #15 – Odds & Ends (Not All Peaches & Cream)

Buster, the old hound dog, back again (for better or for worse).  Following up for a moment on that wondrous invention – BEER.  Come to think of it, there are two old things that come to mind which are still generally very good —  beer and a college education — and they have always gone together quite well!  Unfortunately there is also a strong correlation in the rapid escalation of their costs — could this be strictly coincidence??

Well, at any rate, college tuition has inflated in the region of 800 percent over the last 30 years while the CPI has gone up something over 200 percent.  Analysts feel this escalation may be fueled by the relative ease of obtaining government backed student loans which of course raises another scary specter — another bubble ready to burst at an inappropriate time!

Beer’s cost inflation, while not quite as critical, is still not particularly comfortable either.  My old pappy still remembers the wonderful stories of his elders, about 5 cent beers which were accompanied by a complimentary lunch!  As it now happens, the rapidly escalating beer costs probably wind up within the loans.  Life is good!

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Unfortunately while student debt is growing out of sight, our economy seems to be producing mostly low-paying service jobs which don’t require college degrees.  At the same time as cheap government loans are encouraging more college attendance than we currently need, many of the “For Profit” schools are apparently not preparing students satisfactorily and many youngsters are dropping out or are unable to get jobs if they do get a degree, causing the delinquency rates on those loans to be even greater than on loans from the more traditional schools.  

Gosh, those old study-challenged finance rascals just can’t seem to get enough of “sub-prime” lending.  Old pap was reading about the new “predatory lending” which is sort of replacing the sub-prime mortgage lending, which tanked our economy back in aught seven.  Now the irascible money lenders are pushing “alternative” loans to small businesses, and their efforts have produced an industry of about $3 billion in loans a year, twice the volume of small loans guaranteed by the Small Business Administration (SBA).  

We’re talking of annual interest rates ranging in the 100’s percent area, and these loans often wind up bankrupting the small businesses that had hoped to survive slow times with them.  Here’s the really great news — those ever-clever bankers on Wall Street are helping the new sub-prime lenders expand by providing them funding and (you guessed it, my well-informed readers) packaging the loans into securities that can be sold to investors, just like the sub-prime mortgage securities.  These old bankers may not have been swift enough to pass the accounting exams, but they sure learned how to make big bucks on high interest loans and then fall back on taxpayer bailouts.  Look out below!

As some of you faithful readers are aware, my old pappy and I moved out here to the Idyhoe boonies nearly two years ago.  Well, as I’m sure you may have guessed, Idyhoe is not exactly the financial center of our good old US of A.  However, the financial slicksters out here are not to be outdone — Pew Charitable Trust reports the Idyhoe pay day lenders charge an annual interest rate of 582 percent.  We understand that our ever-vigilent state legislature this year passed a law to set some rules for payday lenders, but not to cap interest rates!!

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Here ya go: get your money; get your mocha!

Here’s a little good news on ineffective advertising (oh, that many more ads were equally inept at conning the public):  While attack ads attempting to undermine the Affordable Care Act have outpaced ads supporting the law, $418 million to only $27 million, the stock funds betting on the law’s success or failure are actually reversed with the ACA Stock Fund up 46.9%, but the repeal ACA Stock Fund only up 13.8% (figures represent the period of February 18, 2013 to Feb 18, 2014 — the S&P 500 was up 22.8% for this period).  It doesn’t happen often anymore but occasionally, (despite those dear old Koch brothers) there is a spark of hope in our grand old country!

A spec of really good news to close out the current reporting:  The loverly little town of Sandpoint, Idyhoe is considering installing some of Solar Roadway’s panels which have the potential of turning America’s roadways into power generating facilities.  The Week magazine recently issued a SWAG (Scientific Wild Ass Guess — an accounting term) opining that replacement of all our roadways with these glass panels could produce three times the entire energy requirement of the country.

I recognize that I’ve been talking about devoting a blog to our very efficient all-volunteer military, and how it might be used for exciting projects right here at home (now that we are actively attempting to avoid costly wars around the rest of the world), but thus far this project has been quite a challenge for one small Basset Hound’s brain.  Howsomever, it will be coming eventually, if I can just quit getting hung up on minutiae!

Bye now, Bus

 

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