Juggling Dynamite

Young people today are desperately seeking places to train for productive careers. To do so, many pursue post-secondary degrees at all costs. And really who can blame them, its not as though there is a vast array of great jobs, apprenticeships or paying internships to chose from. So back to school they go. As part of the credit bubble over the past decade, the US government underwrote more and more student loans so more students could fund more school costs. Naturally admissions skyrocketed and banks and for-profit-schools reaped exponential profits as incentives stimulated quantity rather than quality education.

The students however are not faring well–coming out of the process worse for wear in many cases, with crippling debt (which can’t be expunged in bankruptcy), questionable credentials, and still poor job prospects. The below story on DeVry’s Ross School of Medicine looks at the cozy loop that delivers hopeful students to a life of debt-servitude.

If the west is to get back on track, we have to stop eating our young at the alter of perpetually higher profits for the status quo of larger, established corporations (who have enjoyed record earnings over the past few years some 70% above the long term average, but then claim they cannot afford to pay anything to student interns working for on the job training.)

DeVry Inc., which owns two for-profit medical schools in the Caribbean, is accepting hundreds of students who were rejected by U.S. medical colleges. Students at DeVry’s Ross University School of Medicine and American University of the Caribbean School of Medicine amass more debt than their U.S. counterparts. Although neither AUC nor Ross is accredited by the body that approves medical programs in the U.S., students at both schools are eligible for loans issued by the U.S. Education Department. Here is a direct video link.

A new report from the Dallas Fed this week concludes that the 2008 financial crisis has cost just the US more than $6 trillion to date, and with ongoing costs continuing, could be closer to $14 trillion through its legacy of swollen public debt, lost resources and permanently diminished household financial strength. Moreover, still too big to fail banks continue to cost and threaten the real economy as well as the basic tenants of capitalism:

Deemed “too big to fail,” these financial intermediaries lacked discipline and accountability leading up to the crisis and proved largely immune to the downside of their excessive risk taking. This special treatment violated a basic tenet of American capitalism: All people and institutions have the freedom to succeed and also to fail based on the merits of their actions. In a way, the 2008–09 bailouts exacted an unfair and nontransparent tax upon the American people…

Although unprecedented fiscal and monetary action in the throes of panic during 2008–09 may have prevented a full-blown depression, such intervention did not come without significant costs. Society must deal with the consequences of a swollen federal debt, an expanded Federal Reserve balance sheet and increased regulations and government intervention for years to come.” See the whole report: Assessing the costs and consequences of the 2007-09 financial crisis and its aftermath

Bloomberg’s Max Abelson talks about risks to banks five years after the collapse of Lehman Brothers and ensuing financial crisis. Here is a direct video link.

Sanford Weill, former Chairman & CEO of Citigroup, discusses the impact of the Dodd-Frank Act on the banking industry and the need for more “transparency” in the financial sector, amid new regulations. Here is a direct video link.

And oh yes, btw, US housing risks resume as violently higher interest rates over the past few months have suddenly cut demand out from under over-inflated prices once more.

Here is a direct video link.

As the parent of teenagers who are trying to build the early stages of their resume, here is a stat that stood out for me on the weekend: just 1 in 4, 15 to 16 year olds had part-time jobs in Canada this past summer.

ECRI’s Lakshman Achuthan talks with the BBC to put last Friday’s weak US jobs report in the context of larger trends. Here is a direct video link.