In a recent article for Huffington Post, guest writer Richard (RJ) Eskow spoke to the masses in a powerful and clear voice. His message is one many have been thinking, but perhaps not verbalizing – is the recession truly over?
Eskow retells the American nightmare of 2008 and how the country (read: taxpayers) spent “billions of dollars – perhaps trillions” to rescue the nation’s banks. And if you’ve been feeling as though history is repeating itself due to these same banks continuing their dangerous habits, you’re not the only one. His concern is that the American taxpayer (or, as he puts it: indentured servants) will once again be told to foot the bill – and take the blame for the failures of some of the most brilliant financial minds in the world.
Whether it’s the APR we’re paying on our credit cards or the taxes we pay each year, you can be sure those monies are being funneled, at least partly, to the Wall Street bigwigs. Yeah, the ones who are supposed to know how to manage it.
Did you know there is more than one trillion dollars owed in student loans? And did you know that figure continues to grow to the tune of almost $60 billion each month? It’s true. It’s also true that the delinquency rate is rapidly approaching the 30% mark. Of course, there are a lot of dynamics at play. The job market continues to struggle and college graduates are coming out of college with their degrees and no jobs to go into.
Worse, they’re turning to their credit cards to cover the bases until they are able to land a job that they spent years learning how to master. The banks have routinely handled both of these financial products: the student loans and the credit cards. Now, though, it’s looking as though they’re turning to the same taxpayers that bailed them out three years ago. Meanwhile, many are wondering where the profits are going.
So did the banks act recklessly at the start of the recession in 2008? Eskow says absolutely. And he says those behaviors haven’t changed.
We’ve already rescued American banks with hundreds of billions in public money, saving them from the consequences of their incompetent underwriting of mortgage loans. Now we’re about to do the same thing with student loans, many of which were money-making ventures for those same banks.
The question he poses is who will hold them accountable? The writing is on the wall: the taxpayers will pick up the tab, but there’s no one else who will be held accountable it seems.
Now that Sallie Mae, the government-sponsored enterprise that was designed to help college students finance their college educations, is privatized, it appears many of the head honchos of these banks have gone a bit over the edge. This government sponsorship has allowed excessive salaries, corporate jets – now bitterly referred to as “Sallie Mae’s Jets” and an open checkbook. Still, there are those who are demanding this “private sector skimming” be stopped, though it seems to be falling on deaf ears.
Remember, Wall Street won’t have to answer to the incredibly deflated employment market – it’s safely out of the line of fire. Just to put it into perspective, today’s college graduates are entering a job market where only 46% of the nation’s 18-24 year olds are employed. It hasn’t been this low since 1948, when the government began keeping up with the numbers.
Of course, credit cards are most certainly a trouble spot. Even as more consumers are paying their bills, there are literally millions of new credit cards being sent out on a regular basis.
There are 50 million American Express cards being used, 176 million MasterCards being used and 261 million Visa credit cards. Doing the math, that’s half a trillion credit cards in good standing and being used right now. Therein lies the problem – credit card debt is unsecured. The total, as of the latest figures, hovers around $771 billion. The average balance is around $16,800.
So is there another so-called “perfect storm” brewing? If history is right, it appears that’s exactly what’s happening. The worse part is no one has solutions, which, to many, comes as no surprise. If no one’s willing to take responsibility, then no one stands ready to dig deep for the answers.