Tag Archives | Debt

Shadow Banking Industry Now Worth $76 Trillion

Will unregulated, debt-based financial products destroy the world? Bloomberg reports that the funneling of capital into instruments of so-called “shadow banking” continues to balloon to unimaginably large proportions:

The shadow banking industry has grown to about $67 trillion, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight. The Financial Stability Board, a global financial policy group comprised of regulators and central bankers, found that shadow banking grew by $41 trillion between 2002 and 2011.

The size of the shadow banking system, which includes the activities of money market funds, monoline insurers and off-balance sheet investment vehicles, “can create systemic risks” and “amplify market reactions when market liquidity is scarce,” the FSB said.

Supervisors consider shadow banking activities to be those that allow banks to carry out business off balance sheets, as well as those which allow investors to bypass lenders and the functions they traditionally fulfill on the markets.

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Occupy Movement Buys Up Debts…And Forgives Them!

'Occupy' Zürich Lindenhof 2011-10-30 15-56-28Douglas Rushkoff describes a positive turn in the life of the Occupy movement, for CNN via his blog:

Much like President Obama, the Occupy movement is alive and well and entering its second term, thank you very much. It’s no longer about squatting in public parks, getting on the news, or — in some cases — getting arrested. No, instead this decentralized, bottom-up, anti-Wall Street effort is taking aim at your medical, student and other loans: It aims to relieve your debt.

Just as Obama appears to have left the lofty rhetoric of “being the change” behind him as he confronts the more practical realities of working a financial plan through an intransigent Congress, the occupiers have given up on winning media mindshare or public support and have turned instead to direct action that helps real people. In its Act 2, Occupy is just occupying the space where it’s needed.

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Can Debt Spark A Revolution?

Via the Nation, David Graeber on rebellion against indebtedness:

The rise of [Occupy Wall Street] allowed us to start seeing the system for what it is: an enormous engine of debt extraction. Debt is how the rich extract wealth from the rest of us, at home and abroad. Internally, it has become a matter of manipulating the country’s legal structure to ensure that more and more people fall deeper and deeper into debt.

Financialization, securitization and militarization are all different aspects of the same process. And the endless multiplication, in cities across America, of gleaming bank offices—
spotless stores selling nothing while armed security guards stand by—is just the most immediate and visceral symbol for what we, as a nation, have become.

As I write, roughly three out of four Americans are in some form of debt, and a whopping one in seven is being pursued by debt collectors. There’s no way to know just what percentage of the average household’s income is now directly expropriated by the financial services industry in the form of interest payments, fees and penalties…[data] suggests it is somewhere between 15 and 20 percent.

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Debt Collectors and District Attorneys Collude to Deceive Debtors

Picture: Artist unknown (PD)

The New York Times has a story on the ongoing unethical collusion between debt-collectors and prosecuting attorney’s offices:

The letters are sent by the thousands to people across the country who have written bad checks, threatening them with jail if they do not pay up.

They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors for a class on budgeting and financial responsibility, some of which goes back to the district attorneys’ offices.

So here’s the deal, it’s a crime to write a bad check if you know that the bank isn’t going to honor the instrument. But in most states, in order to be convicted the State has to prove that you knew the check was going to bounce when you wrote it.… Read the rest

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US Debt Collection Agencies Salivating Over Trillion Dollars in Student Debt

Picture: F.W. Murnau (PD)

Unless you owe money yourself, it  may be hard to understand how quickly having outstanding student loan debt can become an almost unbearable situation. College is expensive, and many young people come to school with a fatal combination of financial naivete and unrealistic expectations of what the job market has to offer a college graduate.

There’s over a trillion dollars in US student loan debt, and it’s a growing industry. Families can on occasion escape from their commercial credit debt: They can foreclose on a home. They can file bankruptcy. Student loan debt is forever, a never-ending all-you-can-bleed buffet for those companies fortunate enough to land contracts from the government.

From RT:

Most US college students hope to land a good job with a high salary after graduation. But for some the reality is very different. Many find themselves faced with insurmountable debt – and a loan industry that’s happy to cash in on their misfortune.

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America’s Student Debt Crisis

Picture: j.o.h.n. walker (CC)

Student debt activists and education advocates Kyle McCarthy and Natalia Abrams are tired of the ‘silence and complacency’ that our elected (and duly bribed) officials exhibit in the face of overwhelming evidence of usury and millions of voices of the disaffected. At least two out of three of students take out loans for college and at least 1 out of 5 of those will default.

Via Huffington Post:

Since 1978, college tuition has skyrocketed by over 900%, while simultaneously, grants and scholarships continue to be slashed. The result? Students are forced to mortgage their futures with student debt, from which there is no escape. In 2010, student debt actually eclipsed credit card debt as the second largest consumer debt in the country (second only to mortgage debt, surpassing $1 trillionin total). The Atlantic recently reported that, since 1999, student debt has increased by 511%.

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Banks Falsify Credit Card Lawsuits in Ninety Percent of Cases?

Philip Taylor (CC)

We hear every week about the massive LIBOR interest rate fixing, or the shady practices by which banks drain money from local municipalities, or the false promises given to homeowners across the country by the finance industry, or as much as 90% of foreclosed homes remaining off the market but still shuttered in and out of dispassionate algorithms, or that San Francisco’s assessor discovered ‘errors’ in 84% of home mortgage foreclosures (read: scams). It’s not a big leap of the imagination then to consider that almost all credit card lawsuits brought by banks are fraudulent. Lenders are still continuing the dubious fraud that caused such a scandal last year with robo-signing.

via Russia Today:

US credit card companies have been churning out lawsuits and improperly collecting debt from consumers 90 percent of the time, at least according to a New York judge who deals with these cases.

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Iceland Jails Bankers, Erases Citizens’ Debt, Recovers Strongly

 Seriously, the most advanced place on Earth. Bloomberg writes:

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population.

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates.

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn. Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch.

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Grads Face Spectre Of Student Debt Related Suicide

A fatal peril of life in the 21st century? Via the Huffington Post, C. Cryn Johannsen says:

Suicide is the dark side of the student lending crisis and, despite all the media attention to the issue of student loans, it’s been severely under-reported. I can’t ignore it though, because I’m an advocate for people who are struggling to pay their student loans, and I’ve been receiving suicidal comments for over two years and occasionally hearing reports of actual suicides. More people are being forced into untenable financial circumstances as outstanding student loan debt has surpassed $1 trillion. Currently, 36 million Americans have outstanding federal loans.

I first started appreciating the depth of the problem of suicidal debtors a few years ago, with a post on my blog, All Education Matters, entitled, “Suicide Among Student Debtors: Who’s Thought About It?” I was stunned by the responses. In comment after comment, people confessed to feeling suicidal.

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Peter Thiel Will Pay You $100,000 To Drop Out Of College (If You Have An Idea He Likes)

Considering student loan debt is now a trillion-dollar industry, maybe this PayPal co-founder is on to something. Via 60 Minutes:

One of the wealthiest, best-educated American entrepreneurs, Peter Thiel, isn’t convinced college is worth the cost. With only half of recent U.S. college graduates in full-time jobs, and student loans now at $1 trillion, Thiel has come up with his own small-scale solution: pay a couple dozen of the nation’s most promising students $100,000 to walk away from college and pursue their passions. Morley Safer takes a look at Thiel’s critique of college.

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