Juggling Dynamite

I guess you do have to hand it to those bankers; maybe they are brilliant after all. They wagered that if they could keep pumping up the stock market long enough via QE and creative accounting manoeuvres, the little guys who had fled in tatters in 2007-09 would finally be sucked back into the fray at cycle highs once more. Its a maniacal cycle to witness: central banks pump “free” (taxpayer-backed) liquidity into the investment banks and hedge funds off the market bottom, which allows them to buy (when price risk is the lowest) from all the retail investors who are selling in panic with huge losses. Then after these “strong hands” have enjoyed every conceivable concession and advantage, they take profits and raise cash by selling down their equity holdings back onto the retail crowd just as price risk moves back toward cycle highs. Waiting to repeat the cycle all over again. Seducing and then slaughtering sheep is a very lucrative business model indeed.

So here’s a novel idea. If you can’t find enough people who can afford a new car, ‘sell’ cars to those who can’t afford them with record monthly payments over 5 to 7 years! True this allows the auto makers to report robust sales in the short-run, but we have already seen how the credit-abuse cycle plays out a few times in recent years. Credit is future consumption denied. Future demand grows weaker for longer every day that these short-term gimmicks are embraced.

Phil LeBeau reports on the new ways customers are financing their vehicles. Here is a direct video link.

Just as government-backed loans enabled US housing into unaffordable bubble pricing into 2006, government backed student loans have enabled US colleges to become top-heavy, unaffordable institutions today. With student debt now north of a $trillion and growing, and the job market still weak, something has to give…

The cost of college tuition has more than tripled over the last four decades, adjusted for inflation, while the student loan burden stands above $1 trillion and employment for young adults has been tough coming off of the last recession. But in asking if college is worth it, many stats seem to indicate that, yes, it still is. What may not be worth it, according to a new documentary from filmmaker Andrew Rossi, is the costs of luxury dorm rooms or the biggest stadium, along with paying to party. And amenities like those, Rossi finds, are too often factored into how a school rates for prospective parents and students. In “Ivory Tower,” Rossi posits that the high cost of college is threatening our society. Rossi spoke on Daily Ticker today; here is a direct link.

Here is a direct link to the film trailer.