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Elizabeth Warren’s low-information student loan spear

Elizabeth Warren’s low-information student loan spear

You remember Upworthy, the epitome of low-information in support of Obama and progressives, Upworthy — or, How we are losing the internet to lowest of low information young liberals.

They have maps which demonstrate The high cost of low information voters.

I need to stop checking in there, because they have stuff like this:

Upworthy - Elizabeth Warren Banks Rob Your Kids

How are banks robbing your kids?

By lending them money at rates which are lower than your kids could borrow for any other purpose … because your kids are really, really bad credit risks.

It’s robbery according to Upworthy channeling Elizabeth Warren because the Federal Reserve lends banks in overnight or very short term arrangements money at a super low rate to help stabilize liquidity in the banking system in close to risk-free transactions.

Now The [high-information] Truth About Elizabeth Warren’s Student Loan Crusade:

With that mix of populist rhetoric and subterfuge, Senator Warren stands to whip up a mob of angry students (and pundits) who will demand that the government drop the interest rate on student loans to 0.75 percent. Good luck reasoning with a mob. [I interrupt this quotation to keep this on one homepage screen because otherwise you will not read it, go to link for more high information.]

Let me frame the issue in a way everyone can understand:

Fed short-term risk-free loans to banks
≠ Bank long-term very risky loans to your kids
≠ Robbery

Only in the world of low information could banks helping fund your kids’ education when no one else will lend them money be turned into robbery.

And only in the world of low-information could inflating the bubble be considered a good thing for your kids, when it is not:

Maybe college kids do deserve to take out loans at the Fed’s discount rate—or at the very least something closer to it. But even if student loans were given at 0% it wouldn’t stop the fact that students are spending huge sums on degrees that are utterly useless and have absolutely no real world application.

Think I’m worrying about nothing?  Low information spreads really easily:

Upworthy Facebook Likes 5-18-2013

Really easily:

Move On Warren Student Loan Petition

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Comments

Juba Doobai! | May 18, 2013 at 11:40 am

That low information condition will persist until the reality of graduation and loan repayment hits. Lieawatha and the democrats can only stave off reality for so long. Life happens and the LIV’s will ne day become aware if t.

I am convinced this student loan debt is being encouraged in part to create demand for restructuring the economy. Instead of you cannot get a job and service your loan because you have no knowledge or skills or aptitudes anyone will freely pay you for beyond minimum wage, the pitch is that it is the stagnant economy.

So the Economy that is stagnant because of too much government intervention and regulation already must be restructured with the government in the lead so that graduates can have jobs by decree. And then you also tease with loan forgiveness to get a loyal constituency of voters.

Remember Uncle Karl believed in whatever it took to get a working coalition to gain power in the democratic countries. Once in power you change all the rules that impede planning and redistribution.

I think Princess Running Bare will ALSO militate to change the bankruptcy code so that student debt is discharged.

Great redistributive trick.

It’s troubling, but not surprising, that many of those who are in the low information category are also those the left considers “educated”, i.e., those seeking a higher education. The left has successfully conditioned them to expect, and demand, that government provide everything. We ridiculed Julia, but she is their role model and is the face of our future.

Win Lunch with Michelle Obama and Elizabeth Warren

Win?

The problem is not banks. The problem is people with “good intentions.” They have promised everyone anything and everything, which when finitely available and accessible will necessarily inflate its price. The problem with student loans is that there is no collateral. The risk is born entirely by the banks, their creditors and investors. The problem is exacerbated when the government intervenes and debt accumulation causes a progressive devaluation of capital and labor. It’s a dysfunctional convergence!

legalizehazing | May 18, 2013 at 1:45 pm

At least the left is acknowledging the existence of the fed? Her rhetoric may be completely backwards from logic but it is also critical of the fed..

It’s not like she’s going to get any support in the Senate, least of all the House.

I am thoroughly lost on the intent here..

Low information voters give democracy a bad name.

Should be referred to from now on as FlushWorthy.

inspectorudy | May 19, 2013 at 1:25 am

I think that the student loan program is one of a series of programs that get the younger generation to view the government as their third parent and learn to rely on the largess of it. By the time they are in their 30’s and 40’s they will see the government takeover of their lives as a good and normal thing. Then we are on the road to a socialist nation and there will be no turning back even with a conservative president. Look at the Obamaphone crowd and you will understand what I am talking about.

Federal student loan eligibility sets a price-floor for the cost of college.

In other words, easy federal credit price-fixes the marketplace.

While there is some nominal difference in price among public schools as compared to private – that’s only because state taxation is footing part of the cost.

So, we have a cartelized, price-fixed marketplace courtesy of the federal government.

Tuition increases and federal eligibility for loans move in unison.

On top of this, in order to protect ‘the system,’ which again is a monopoly by cartel, students are denied bankruptcy protection.

If the logic of very many past presidents and congresses is to hold, removing bankruptcy essentially removes losses to the lender.

Surprisingly, this is somewhat true, because of the harsh nature of a “default.” The government collects nearly 100 cents on the dollar on defaulted loans…eventually.

So, the question then is, why are students being charged an interest rate in excess of the risk-free rate on similarly termed debt?

The term on federal student loans is 10 years. The 10-year US savings bond yield is 1.9%.

She’s right about one thing, students are getting ripped off. First the fed drives up tuition, and creates the conditions for price-fixing cartel, then it cranks up the interest rates and makes them compound, then it removes bankruptcy protect.

Yes, we’re angry. We’re entitled. We’re entitled to a competitive marketplace, and we’re not getting one.

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