Daily Digest 12/11 – Student Loans A Lot Like Subprime Mortgage Debacle, Rural Population Declining In TX


Illinois’ other financial sinkhole: Retiree health care (Saxplayer00o1)

Unfunded pension costs constantly make the news, but the state also faces a $41 billion bill for retiree health costs—and is doing the worst of any state in setting aside the needed money, S&P says.

Student Loans A Lot Like The Subprime Mortgage Debacle, Watchdog Says (Saxplayer00o1)

Back then, he was watching the number of risky mortgages grow and grow. Now he’s watching student loans, “and there are a lot of similarities,” he says. “You’ve had an absolutely explosive growth in the amount of student debt. In 15 years it’s gone from about $300 billion to now $1.6 trillion.”

Americans keep gorging on debt, thanks to the Federal Reserve (Saxplayer00o1)

Another large problem area is corporate debt. Businesses have been the biggest debt hogs in this expansion, increasing their debt by roughly 40% relative to U.S. gross domestic product, or GDP. (See chart below.) This money has gone mostly to shareholders through increased dividends and a stock-repurchasing frenzy unmatched by history.

Credit Suisse shocking call: Fed will launch ‘QE4’ before year-end to stem Street cash crunch (Saxplayer00o1)

A fourth version of quantitative easing — often referred to as “money-printing” for the way the Fed uses digitally created money to buy bonds from big financial institutions — would be needed by year’s end to bridge a funding gap as banks scramble for scarce reserves, Zoltan Pozsar, Credit Suisse’s managing director for investment strategy and research, said in a note to clients.

We still don’t know what caused the Wall Street cash crunch earlier this year (Saxplayer00o1)

“If it persists for a prolonged period, it may result in hysteresis effects that hamper market functioning,” the BIS researchers said. “For instance, the internal processes and knowledge that banks need to ensure prompt and smooth market operations may start to decay.”E

Central banks worldwide buying up massive amounts of gold in a shift away from US dollar – Goldman Sachs (Saxplayer00o1)

“De-dollarization in central banks – demand from central banks for gold is biggest since the Nixon era, eating up 20 percent of global supply,” the head of global commodities research at Goldman, Jeff Currie, told Bloomberg. “I am going to like gold better than bonds because the bonds won’t reflect that de-dollarization.”

Central Banks Are Facing Policy Limitations, McCafferty Says (Saxplayer00o1)

In Britain, one think tank argues that the country isn’t equipped to combat any recession when it comes to fiscal or monetary policy. After more than 10 years of crisis-fighting, central banks globally are facing a new decade with few good options to tackle the next downturn.

The world’s super-rich are hoarding physical gold (Adam)

But the firm also surfaces some really interesting data on how investors have expressed their desire to own gold. Which is that owning the physical metal seems to be the global elite’s preferred way to hedge against tail events.

“Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs,” the firm writes, citing the chart below.

In Fastest-Growing Texas, Rural Population Is Still Declining (tmn)

All of this is an odd story to hear coming out of the fastest-growing state. Yet, between North and West Texas alone are 10 counties that have lost over 70 percent of their population since 1940. Even though the pace has slowed, the trend for all of them is still downward.

Under The Weather (jdargis)

I wasn’t immune to social cues. I knew I was supposed to agree that biodegradable cups were helping or that the empathy of the next generation would pull us out or that—a common response—not all life would be lost, and that humans, resilient, would go on. In each of these conversations, there was a subtext: This is where you nod and agree. This is where you choose this friendship over party-pooping facts. This is where you stop.

The Arctic may have crossed key threshold, emitting billions of tons of carbon into the air, in a long-dreaded climate feedback (RS)

Especially noteworthy is the report’s conclusion that the Arctic already may have become a net emitter of planet-warming carbon emissions due to thawing permafrost, which would only accelerate global warming. Permafrost is the carbon-rich frozen soil that covers 24 percent of the Northern Hemisphere’s land mass, encompassing vast stretches of territory across Alaska, Canada, Siberia and Greenland.

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