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  1. #1
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    David48atTD's Avatar
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    How US student loans could cause the next share market crash



    An accounting professor at the University of Sydney's Business School says a dip in the share market is now imminent.
    "World financial markets could be facing a major correction possibly leading to another global financial crisis," Dr Stewart Jones said.

    So is he right?


    New game in town

    Now, said Dr Jones, there's a new game in town. Investment banks and hedge funds are currently chasing US student loans.
    There are two main types of student loans: federal loans and private student loans. They're distributed to roughly 43 million students.
    Some students, years after graduating, have loans in the hundreds of thousands of dollars, but an average loan is about $30,000.


    A new target for profit

    There's a thriving over-the-counter derivatives market worth $US500 trillion globally and now it wants to suck up these student loans
    and make them tradeable securities.
    Dr Jones said investment bankers on Wall Street are once again "cutting and dicing up these loans into collateralised loan obligations",
    the market for which has been dubbed the "student loan asset back security market" and is currently about $200 billion.

    Just like before the financial crisis when unemployed Americans defaulted on their mortgages, now graduates, overwhelmed by their debt, are beginning to default on their loans.

    "With default rates on student loans at around 11 per cent, and with a much higher number in a deferral or repayment program, it's looking like an overvalued market," Dr Jones said.
    There could now be billions of dollars on Wall Street that are backed by you guessed it nothing.

    More here
    Perspective is everything ... it's the difference between going through an ordeal or going through an adventure..

  2. #2
    disturbance in the Turnip baldrick's Avatar
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    how many years was it between when they started to package up the housing loans and the unravelling ?

    and the aust business prof should be looking closer to home at the aust home loan market

  3. #3
    Fresh Seaman CaptainNemo's Avatar
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    Wonder how this will play out with Britain's ginormerous student debt lake of piss?

    Tories plot to slash student loan rates in attempt to court young voters






    Theresa May is looking at cutting 
interest rates on student loans and strong-arming universities into lowering tuition fees in an effort to win back young voters. Credit: PA






    9 September 2017 • 10:00pm Theresa May is looking at cutting 
interest rates on student loans and strong-arming universities into lowering tuition fees in an effort to win back young voters.
    Announcements could come within weeks as the Tories try to broaden their appeal at next month’s party conference and the autumn Budget.
    Young voters abandoned the Conservatives in their droves at the June general election, after Jeremy Corbyn promised to scrap tuition fees.
    One plan being considered is to change the formula through which many graduates pay interest rates of more than 6 per cent – about double the rate of inflation.
    Tories plot to slash student loan rates in attempt to court young voters

    Tuition fee repayment earnings threshold to rise to 25,000

    Theresa May announced change, along with a freeze in fee levels and review of student funding, at Tory party conference










    Sunday 1 October 2017 11.29 BST Last modified on Monday 2 October 2017 09.38 BST

    Low-earning graduates will benefit from a delay in their student loan repayments under a Conservative scheme designed to defuse the political damage over tuition fees and attempt to woo younger voters.
    Speaking at the start of the Conservative party conference in Manchester, Theresa May announced plans to raise the income level that triggers student loan repayments for recent graduates in England from 21,000 to 25,000 a year.
    The change is likely to apply only to those graduates who took out the higher rate of student loans introduced in 2012, which perversely means that earlier graduates will have higher loan repayments even if they are on the same income level as later graduates with much higher debts.






    The government is also to freeze undergraduate tuition fees at 9,250 a year in England, and May announced a review of student funding to look at long-term issues, such as a return to maintenance grants and varying tuition fees for courses.
    https://www.theguardian.com/educatio...-rise-to-25000

  4. #4
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    And the Beeb were talking this afternoon about the burden of Chinese consumer credit becoming too much.

  5. #5
    Fresh Seaman CaptainNemo's Avatar
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    Yep, it's almost as if they are willing it to happen - any disaster will do as long as it stops Brexit and brings down Trump and gets more "refugees" angst whipped up - they really do have a disturbing and distorted set of priorities when there are real problems in the world, out of control they are, and operating way outside and beyond their Charter's remit... it's taken 100 years to destroy the BBC, what a legacy.
    Still, house prices, eh?!
    http://www.youtube.com/watch?v=H1F2i0rYMj8

    we are all figments of our own imagination.

  6. #6
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    Quote Originally Posted by David48atTD View Post
    There's a thriving over-the-counter derivatives market worth $US500 trillion globally and now it wants to suck up these student loans
    and make them tradeable securities.

    Dr Jones said investment bankers on Wall Street are once again "cutting and dicing up these loans into collateralised loan obligations",

    the market for which has been dubbed the "student loan asset back security market" and is currently about $200 billion.
    Creepy, but not surprised.

    It never ends.....

  7. #7
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    Quote Originally Posted by CaptainNemo View Post
    Yep, it's almost as if they are willing it to happen - any disaster will do as long as it stops Brexit and brings down Trump and gets more "refugees" angst whipped up - they really do have a disturbing and distorted set of priorities when there are real problems in the world, out of control they are, and operating way outside and beyond their Charter's remit... it's taken 100 years to destroy the BBC, what a legacy.
    Still, house prices, eh?!
    Or they're just reporting.


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