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“We know the model is not sustainable,” said Lawrence T. Lesick, vice president for enrollment management at Ohio Northern University. “Schools are going to have to show the value proposition. Those that don’t aren’t going to be around.” (The New York Times; May 14, 2012)Very few topics have received as much attention here at Sense on Cents as the student loan crisis.In my opinion, the size, scope, and impact of this problem is an enormous anchor weighing down our next generation and our nation’s economy.Make no mistake, this anchor is not only impacting thousands of students and families but...

Washington is now debating how to keep student-loan rates low even as parents put the finishing touches on their kids’ college financial-aid forms. Everyone agrees that there is a “student-loan crisis” — yet few seem to notice the student-loan market and pre-crisis housing lending are looking more and more alike. The result is likely to be no less so. Washington policy-makers were quick to condemn private-sector lenders for the housing crisis, for pushing unsuspecting borrowers into houses they couldn’t afford. The crisis featured no-documentation loans, low teaser interest rates and a disregard of the collateral supporting the loan. When housing...

Back in late 2006 and early 2007 a few (soon to be very rich) people were warning anyone who cared to listen, about what cracks in the subprime facade meant for the housing sector and the credit bubble in general. They were largely ignored as none other than the Fed chairman promised that all is fine (see here). A few months later New Century collapsed and the rest is history: tens of trillions later we are still picking up the pieces and housing continues to collapse. Yet one bubble which the Federal Government managed to blow in the meantime to...

The Federal Reserve Board’s Open Market Committee will announce this afternoon whether it is keeping the Fed Funds target at current levels or doing something else. Update: as expected, no changes. Housing One asset class that has weighed heavily on The Fed’s mind is the housing market. The Fed Funds Target rate fell off the cliff in January 2008 and fallen steadily to virtually zero. But notice that home prices (as measured by FNC’s 20 Metro house price index) has continued its downward path despite historically low Fed Funds Target rate and mortgage rates. Stock Market On the other hand,...

The Fed: Oops, we're doing it again! By Frank Ryan No sooner had the housing market bubble burst in 2008 than the culprit for the real estate bubble was identified, in part, as the teaser interest rates. Teaser interest rates, also called adjustable rate mortgages, are very low short-term interest rates which reset to more normal longer term rates after a period of time. These teaser interest rates allegedly enabled people to buy a type or size of home beyond that which they ordinarily might have afforded due to very low initial monthly payments. When these interest rates reset after...

The next financial bubble to burst could be loan debt owed by U.S. college students. That's just one risk confronting the country's higher-education system, according to a new Standard & Poor's study (no public link) that examined the nation's college affordability crisis. The credit rating agency says that colleges and universities today face three key financial threats: 1. Inadequate household income. Students are struggling to pay for college because their families' stagnating income hasn't kept up with college prices. During the past decade, average U.S. household income fell from $64,232 to $60,395. That's about what New York University costs for...

Gasparino actually said in plain English: 1. The 2008 Real Estate Bubble was caused in large part by the three ratings agencies 2. That Warren Buffet had ownership of Moody's and made millions at the time. 3. That the Lubrizol purchase was a continuation of a trend that Buffet has shown toward these sorts of ethical lapses in very large, economy moving transactions. So far, this is the very first time that anyone in the MSM has uttered such things, and the last place I thought I'd see it was on a Fox channel. Kudos to Gasparino for actually reporting...

Paul Krugman had an interesting blog in his New York Times “Conscience of a Liberal” column entitled “A Tale of Two Bubbles.” In the blog, Krugman points out that there was a Clinton bubble and a Bush bubble – Clinton’s was an equity (dotcom) bubble that burst and Bush’s was a debt (housing/credit) bubble that burst. Krugman’s point is that Clinton’s bubble only harmed equity investors while Bush’s bubble harmed virtually everyone. But if we look more closely at the data, Krugman’s criticism of the Bush Administration (as if Congress had nothing to do with it!), a different Tale can...

Media propagandists continue to advance the Democratic Party line. On December 21, Bloomberg News breathlessly reported, "The leading Republican candidates for president have embraced an explanation of the financial crisis that has been rejected by the chairman of the Federal Reserve, many economists and even three of the four Republicans on the government commission that investigated the meltdown." Reporter David J. Lynch further explained, "Both former House Speaker Newt Gingrich and former Massachusetts Governor Mitt Romney lay much of the blame on U.S. government housing policies, saying they led to the real estate crash that almost brought down the banking...

Debunking The Chinese 'Soft Economic Landing' Myth: Short The Bubble December 19, 2011 China’s growth curve has gone parabolic in recent years. For the last couple of decades, China has typically averaged 10% GDP growth, and it has maintained that growth even as a multi-trillion dollar economy. Of course, 10% growth in an economy already worth trillions is an astounding achievement, but it can also lead to severe economic tribulations, such as soaring housing and food prices. China has incurred both of these troubles. As a growing middle class emerges, demand for beef has far outstripped supply growth, and beef...

Agustino Fontevecchia, Forbes Staff 12/19/2011 @ 4:15PM |2,956 views China Waking Up? Central Bank Now Selling Forex Reserves To Support Yuan Marking a clear break with its policies over the last several years, the People’s Bank of China (PBoC) announced a second consecutive month of foreign exchange outflows in November, a move designed to support the value of the yuan. China’s currency intervention came alongside a report showing property prices continuing to fall, as Beijing clamps down on what many see as a dangerous real estate bubble. The Red Dragon appears to be waking up. Chinese policymakers are doing everything...

Home prices and sales plunge after China's government intentionally slams on the brakes. Some recent buyers stage demonstrations, destroy real estate offices and demand refunds of up to 40%. Falling home values. Debt-strapped borrowers. Real estate woes dogging the economy. It's old news in the United States, but now the air has started to leak from another great housing bubble — in China. Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai...

Once upon a time ('08) there came a presidential candidate...his name: Barak Hussein Obama. Little was known about him but(funny?), most of the establishment media curiously weren’t very curious about him... it was such a GREAT story, the first African-American with a good chance to be elected president, (no matter he had no birth certificate)! Big media were enthusiastic players/salespersons in this political scenario, soon casting aside the normal questions as to qualifications and background and also tossing aside the assumed Democrat front runner, Hillary Clinton... for this "clean articulate" new guy! Wild speculations ensued, tingles went up/down media pundit's...

t’s officially a crisis. Student loan debt has hit the $1 trillion mark, exceeding Americans’ total credit card indebtedness. Unemployed graduates with huge loan balances are camping out in “Occupy” camps -- the Hoovervilles of our age -- around the nation. And President Obama, perhaps afraid those camps will be dubbed “Obamavilles,” as indeed they have already been by some, has unveiled a new proposal that promises to help graduates who are drowning in debt. Unfortunately, “promises” is the correct word. Though unveiled with much fanfare, the Obama proposal doesn’t really do much. First, as the Chronicle of Higher Education...

By staff reporter Yu Zhixiang 10.14.2011 18:39 Ordos Property Developer Commits Suicide Wang Fujin of Zhongfu Real Estate Development Co. took his life and another co-owner of the property development firm Hao Xiaojian is now on the run (Beijing) – The owner of a property firm in the affluent Inner Mongolian city Ordos reportedly committed suicide after defaulting on private loans from individual lenders. In late September, Wang Fujin of Zhongfu Real Estate Development Co. took his life and another co-owner of the property development firm Hao Xiaojun is now on the run, China Business News reported on October 13,...

By staff reporters Zhang Bing, Zheng Fei and Zhao Jingting 10.11.2011 14:36 Cash Crash for Wenzhou's Private Loan Network Everyone can win and everyone can lose in a Chinese city that plays a risky game of high-interest rate, private lending Dubbed the nation's capital of private financing, the city of Wenzhou offers a textbook example of how non-bank lending has fueled private sector prosperity – and risk-taking – in China. A recent central bank survey said about 60 percent of all local businesses and the vast majority of households are interconnected through the city's private lending system. a It's a...

In today’s Wall Street Journal: Asked who was to blame for the 2008 financial crisis and whether any bankers should have been prosecuted, Mrs. Bachmann and former House Speaker Newt Gingrich put the onus on the federal government, with Mr. Gingrich suggesting that former Senate Banking Chairman Chris Dodd and Rep. Barney Frank, former chairman of the House Financial Services Committee, should both be jailed.“It was the federal government that pushed the subprime loans . . . that pushed the community reinvestment act,� said Mrs. Bachmann, citing what she considered the causes of the housing meltdown.Mr. Frank released an emailed...

Analysis: Bubble concerns spread to China commercial property By Langi Chiang and Charlie Zhu BEIJING/HONG KONG | Tue Oct 11, 2011 12:49am EDT (Reuters) - Concerns about a bubble in China's residential property market is spreading to the commercial real estate sector at a time when developers are upping their exposure, and the country's insurance industry is poised to invest huge sums into the space. While commercial prices are steady and insurance companies are watching and waiting, residential property developers have increased investment into the office sector after Chinese government measures were instituted to cool home prices. Shimao Property (0813.HK),...

Over 65 M completed new homes sit unused in China,  along with public buildings/accompanying infrastructure... If the Chinese property bubble pops... what then? The massive public projects under way in communist China today include sprawling housing developments, retail shopping districts, and 'forests' of skyscrapers. Since they were built to support the country's ongoing economic boom and real-estate rush, all these tower block condos, economic centers, and recently-built neighborhoods should be bustling with hard-working Chinese newcomers from the countryside... or so you'd think.But satellite pictures taken earlier this year revealed that China's odd unused-housing stock glut has only gotten worse, if anything: they indeed...

Chanos calls China syndrome John Daly Published Thursday, Sep. 29, 2011 2:56PM EDT Last updated Thursday, Sep. 29, 2011 5:30PM EDT China is in the midst of the biggest real estate bubble in human history—“Dubai in 2007 times 1,000.” And Sino-Forest, the less-than-meets-the-eye Canadian forestry play in China? That fits a pattern: Promoters “find a different investment hype, a story, to get people excited. In the 1990s, it was the Internet, and now it’s China. Unbridled growth.” More related to this story Why should we believe this prophecy of imminent calamity in the market that we were all counting on...

(VIDEO) He’s Going to Break the Unpatriotic, Crazy Tea Party Bubble: Van Jones Reveals the Strategy Behind Why the Unions & Left Are Villainizing the ‘Enemy’ Tea Party at a Progressive Convention

There have been rumblings for weeks that the economic plan to be offered by President Obama after he returns from his vacation would be aimed, at least in part, at trying to re-inflate the American housing market. The dribbles from the White House on housing have hinted at some big ideas: having the government hold and lease foreclosed homes and even having the government fully take over busted and bailed out mortgage buyers Fannie Mae and Freddie Mac. The trial balloon in today’s New York Times puts the earlier leaks in perspective. The idea is to have the government offer...

From GoldCoreGold Down Further 2% – Chorus of ‘Gold Bubble’ Callers Out in Force Again All major currencies have risen against gold again today as the vicious sell off seen on Tuesday and particularly yesterday continued in Asia overnight and in Europe. Gold is trading at USD 1,723.80, EUR 1,192.10, GBP 1,052.90, CHF 1,369.50 and 133,225 JPY per ounce.Gold at $1,700/oz Remains $800 Below the Real High (Inflation Adjusted) from 1980Gold’s London AM fix this morning was USD 1,716.50, EUR 1,191.10, GBP 1,049.59 per ounce (sharply lower from yesterday’s USD 1,850.00, EUR 1,279.30, GBP 1,119.58 per ounce).The expected correction was...

A Bronx boom-and-bust story shows why the nation hasn’t yet recovered from the financial crisis. As the American economy limps through its second “recovery summer,” hobbled by trillions of dollars in bubble-era debt, politicians and regulators should take a long look at an unlikely place: Kingsbridge, a neighborhood in the northwest Bronx. In some ways, Kingsbridge’s credit-bubble experience was no different from the rest of the nation’s. As the bubble reached its greatest size in late 2006 and early 2007, the financial system—aided by dizzyingly intricate instruments and coddled by the government, which had long kept investors from facing the...

Imagine a product where sky-rocketing prices outpace the growth of inflation and personal income. These prices are fueled by government subsidies, favorable taxation and cheap credit. The peddled product is highly priced and considered a signal and source of middle class prosperity. Those who have it are successful. Those who don't have it are left in the dust and both political parties in Washington, D.C. push relentlessly to expand the products availability to all Americans. No, this is not about the housing bubble. This is the higher education bubble. According to the College Board, tuition and fees at public universities...

AEI’s Michael Barone wrote recently about the higher education bubble, which could also described as a “low-interest education loan bubble” to reflect the government’s role in subsidizing higher education, similar to its role in subsidizing homeownership. The topic has been receiving a lot of attention lately, and there is even now a Wikipedia listing for “higher education bubble.”

When governments want to encourage what they believe is beneficial behavior, they subsidize it. Sounds like good public policy. But there can be problems. Behavior that is beneficial for most people may not be so for everybody. And government subsidies can go too far. Subsidies create incentives for what economists call rent-seeking behavior. Providers of supposedly beneficial goods or services try to sop up as much of the subsidy money as they can by raising prices. After all, their customers pay with money supplied by the government. Bubble money, as it turns out. Sooner or later, bubbles burst. We are...

A bipartisan group of U.S. senators and representatives last week joined with NAHB and other business and consumer groups in calling on federal regulators to revise a pending proposal that would require a minimum 20% downpayment for “qualified residential mortgages." They argued that such a plan goes against the intent of Congress, would keep homeownership out of reach of most first-time home buyers and many middle-class households, and would deal a devastating body blow to the already fragile housing market. “This rule is an overreach. If left as is, it would make recovery in the housing market almost impossible,” said...

Sales of existing homes fell in May, as severe weather and high gas prices weighed on the shaky housing market. Home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April, the National Association of Realtors said Tuesday. Sales were more than 15% lower than in May 2010. Economists had expected a May sales rate of 4.79 million existing homes, according to consensus estimates from Briefing.com. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,"...

First, let us start with a definition of a tech bubble.A tech bubble is the rapid inflation in the valuation of public and private technology companies that exceeds their fundamental value by a large margin. It is accompanied by the rationalisation of the new pricing, and then followed by a spectacular crash in value. (It also has the “smart money� investing early and taking profits before the crash.)Bubbles are not new; we have had them for hundreds of years (the Tulip Mania, South Sea Company, Mississippi Company, etc.). And in the last decade, we have had the dot.com bust and...

The edge of our solar system is filled with a turbulent sea of magnetic bubbles, according to new NASA research. Scientists made the discovery by using a new computer model, which is based on data from NASA's twin Voyager probes. The unmanned Voyager 1 and Voyager 2, which launched in 1977, are plying the outer reaches of our solar system, a region known as the heliosheath. The new discovery suggests that researchers will need to revise their views about the solar system's edge, NASA officials said. A more detailed picture of this region is key to our understanding of how...

John McMonigle claims to be the world's number one real estate agent. With $2.5 billion in residential sales over the past six years, this 46-year-old realtor may well have been. And now he's declaring bankruptcy. According to the Orange County Register, McMonigle has amassed $50 million in debt, even after selling his luxurious Newport Beach condo, his car and personal effects. The Oklahoma native started small, arriving in California with only $73 in his pocket in 1989. But within four years he was grossing $100,000 a year. McMonigle's ascension through the ranks of top realtors reached dizzying heights during the...

More shoes may be dropping at the California Public Employees' Retirement System. Forty-nine staff members, including the president and chief investment officer, have been notified they are being investigated by the Fair Political Practices Commission for possible violations of gift reporting requirements. ... some of the potential violations went back five years. The investigation grew, indirectly, out of the scandal involving outside placement agents and their allegedly corrupt links to senior CalPERS executives

A desert site in Arizona sold for $32.5 million this week, five years after the California Public Employees’ Retirement System paid $400 million for the land. “Of all the speculative deals I’ve seen here, this was right at the top,” McDonnell said. Calpers had investments valued at $209.7 million in MW Housing Partners III June 30, 2007. The next year, the investment had a negative market value of $102.9 million.

College is a scam — so let’s make money off it Commentary: Debt creates generation of indentured servants By James Altucher NEW YORK (MarketWatch) — We can’t deny it anymore: College is a scam and a bubble — and the reasons why appear below. But I’ll be the first to admit it’s going to take years for that bubble to burst. And while college tuitions are still skyrocketing and student-loan debt is creating a generation of indentured servants, we might as well benefit from it. Many stocks will continue to go up from the multidecade college bubble, even as it...

Independent Economist Andy Xie has been a China bear for some years now, so long that as if there is no one who wants to listen to him again. Well, at least I will still first read about what he said before dismissing him. In the Lujiazui forum, he told Sina finance that real estate prices will drop by 25% by the end of this year, and 40-50% in three years. Yet he thinks the banking sector will not be hurt much even with 50% of drop. This now echoes the view by Guo Shiping, a professor in Shenzhen University,...

If you thought the housing crisis was bad, think again. It's worse. New data just out from Zillow, the real-estate information company, show house prices are falling at their fastest rate since the Lehman collapse. Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow. And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high. Zillow now predicts prices will fall about 8% this year and says it no...

Friday, May 6, 2011 Rare Earths Seen Growing Less Rare SYDNEY (Dow Jones)--Demand for rare earth elements that has driven up prices more than tenfold since 2009 is likely to be met by a surplus of supply by 2013, as Western companies start up new mines to compete with the Chinese firms that now dominate the market, Goldman Sachs analysts predicted Thursday. The forecast calls into question the sustainability of the current boom in rare earths, a suite of 17 elements used in products from high-powered magnets, and fuel refining to energy-efficient light bulbs and mobile phone screens, as well...

Following the collapse of housing prices, a growing number of people have voiced concerns over a looming collapse of higher education tuition. Initial apprehensions were expressed at least as early as 2009 in places like The Economist and The Chronicle of Higher Education. Today, there is a wikipedia page devoted to the topic and, in the last week alone, articles about this issue appeared here, here, and here. As Glenn Reynolds, a faculty member at the University of Tennessee law school, points out, higher education shares some salient features with the pre-collapse housing market. (And Mark Perry, a professor of...

A cascading crash in commodities beginning with silver a week ago spread to oil and copper as exchanges took steps to rein in speculation, economic data pointed to a global selloff and big name investors took profits.

Silver is now threatening to fall below $38/oz, which would mark a nearly 22% decline from its bubblicious highs last week. It's obviously spectacularly volatile, and we don't know how this will end up, but we can think of several threats to silver bulls. * As the lady in the Lind Waldock (commodities broker) commercials always says, commodities are all a price play. There's no hard metric for anyone to know whether something has gotten cheap or not. There's no P/E level that makes silver a must buy. * Big, smart money is selling: Soros, Carlos Slim, etc. * Margin...

(summary deck only) Silver futures contracts fall $3.19, or 7.5%, to $39.38 an ounce, their third consecutive decrease since hitting a record $48.58 on Friday. Most other commodities also retreat.

Brett Arends, writing at MarketWatch, refutes the notion that gold is in a speculative “bubble�. He does so by comparing the current spike in gold prices with other speculative run-ups in recent history. Gold is in a bubble. Anyone will tell you that. They’ve been saying it since gold was about, oh, $500 an ounce.But it’s a funny kind of a bubble. It’s the only one I’ve encountered where so few people seem to own the asset in question… During the dot-com bubble, you met lots of people with tech stocks. Taxi drivers told you what dot-coms they owned.During the...

Jim Rogers Concerned by Silver's 'Parabolic' Rise Published: Wednesday, 27 Apr 2011 | 7:11 AM ET By: Antonia van de Velde CNBC Associate Web Producer With silver near multi-year highs, famous commodities bull Jim Rogers warned silver prices could become dangerous if they rose even further to “parabolic” levels, telling The Times of India he is keen to buy more, but would sell if the price rose too fast. Silver futures surged to a multi-year high of $49.45 per ounce on Monday, but on Tuesday the May silver contract recorded its largest one-day fall in a month. Silver steadied somewhat...

I was just starting to work on a column about silver mania Tuesday morning when a big, beautifully produced ad insert on silver, of all things, arrived with my Financial Times. Proclaiming that “silver is the single greatest profit opportunity of our time,” the insert featured a huge, nearly three-dimensional replica of a one-ounce U.S. silver eagle, with Liberty herself reaching out her hand and In God We Trust right there for all to see. The coin replica, some 3 ½ inches in diameter, shone like a harvest moon, glittering with the possibility of instant riches. And — you just...

Deepening Economic Crisis: Inflation, Rising Interest Rates, Surge In The Price Of Gold And Silver Economics / Inflation Apr 24, 2011 - 12:43 PM By: Bob Chapman Economic recovery does not seem to be taking effect in spite of more massive expenditures by Congress and the Fed. The IMF says financial stability has improved, but then again their vision is almost always clouded. US tax revenues are not increasing in a meaningful way, manufacturing struggles to expand and Wall Street flourishes in a cascade of mega salaries and bonuses. In another six months the US will be three years what...

Senator Bernie Sanders added a new victim to the long list in his most recent column -- college students. Sanders complained that the Republican budget proposal would reduce the average Pell higher education grant by 17 percent at a time when the cost of a college education is "soaring." Having just sent the last of my three children off to college, I cannot argue with Sanders’ description of college tuition costs -- they are, indeed, soaring. Statistics confirm personal observation as, according to the Measuring Up 2008 report by the National Center for Public Policy and Higher Education, tuition and...

Weird ice cream flavors have in recent years spread like mad and now include such inviting types as raw horseflesh or sardines and brandy. Is something similar happening in the world of ETFs, or Exchange Traded Funds? Mario Draghi, chairman of the Financial Stability Board, hinted as much last week. On Monday, the FSB delivered a more detailed report on the matter, noting that these once “plain vanilla” investment products have taken a “disquieting” turn and have tacked on “new elements of complexity and opacity.” The new flavors of ETFs pose new challenges regarding counterparty and collateral risks and could...

Could the Chinese monetary tightening be working? The National Bureau of Statistics has released its latest food price update for the period April 1-10, which shows that while most foods continue to rise modestly, several food products have plunged particularly cucumbers and rapes, both falling 8.8%, kidney beans 6.3% and kidney beans down 6.3%. Yet this is nothing compared to what is happening to Chinese real estate: it appears Chanos' long anticipated property bubble may have popped... but the supersonic boom is so loud that nobody has heard it yet. From Market News: Prices of new homes in China's capital...

When Federal Reserve Chairman Ben Bernanke this month kicks off regular press briefings, he'll likely face uncomfortable questions about whether his ultra-easy policies risk creating a new round of asset bubbles.Critics inside and outside the Fed have taken aim at Bernanke's aggressive strategy and its long-term effects on bonds, commodities, stocks and more. They recall that the central bank's cheap money helped inflate the housing bubble whose debris has yet to be fully cleared."We are seeing the signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital," Dallas Fed President...