Who is holding the $1.3 TRILLION student loans? Who is holding the mortgage loan of the family who bought my condo last week at 50% over what we paid 5 year ago, with 3.5% down (FHA insured of course), who holds the $4 Trillion printed by the FED with various Quantitative easing? You are correct, it is not strictly housing bubble this time, but why do I feel like I am sitting in a giant bubble bath.
“Who is holding the $1.3 TRILLION student loans?”
My guess is that it’s the investors who own stock or buy paper from Sallie Mae, listed on the NASDAQ.
“Who is holding the mortgage loan of the family who bought my condo last week at 50%...”
It’s surely part of a CDO bundle, sold to investors. Insurance companies and retirement funds buy them for the cash flow.
“who holds the $4 Trillion printed by the FED with various Quantitative easing”
The Fed holds the paper. The banks get cash balances in exchange. QE purchases ended in late 2014.
“but why do I feel like I am sitting in a giant bubble bath.”
There is arguably a bubble in bond prices right now since interest rates are at record lows. When interest rates go up bond prices will tank. But unless the borrowers default the lenders will continue to get paid, which wasn’t the case with mortgage defaults. A lot of the bonds are gov’t issues and depend upon tax receipts. So defaults will depend upon the ability of the issuing govt’s to collect taxes.
And if the bond market tanks, it will take the stock market with it. The bond market is much larger.
But I don’t see a bubble scenario as big as the mortgage bubble. That one caught a whole lot of investment professionals asleep at the switch.