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The $1.7 trillion student debt crisis was caused by "deliberate policy decisions" that Biden can reverse with loan forgiveness, Elizabeth Warren says

"Mr. President, labor cares about student-loan debt," Sen. Warren said. She's calling on Biden to deliver $50,000 in relief to federal borrowers. .U.S. Sen. Elizabeth Warren (D-MA) speaks on student debt at the AFL-CIO on June 22, 2022 in Washington, DC. The AFL-CIO held an event to discuss “the importance of student debt cancellation for American workers.”Alex Wong/Getty Images Sen. Elizabeth Warren said the student debt crisis was caused by "deliberate policy decision." She referenced tax cuts that Democrats have criticized in the past for favoring the rich. Biden is nearing a decision on relief that will likely be announced in July or August. Massachusetts Sen. Elizabeth Warren believes policy is to blame for the $1.7 trillion student debt crisis."Can we all just take a deep breath and acknowledge that $1.7 trillion in student loan debt did not just fall out of the sky?" Warren said during a Wednesday student debt roundtable at the offices of union federation group AFL-CIO. "It did not just happen as an act of gravity, it did not just happen because of age, it happened because of deliberate policy decisions to make investments in cutting taxes for the richest Americans and paying for it by shortchanging the education of our children."Warren was referring to general tax policy that Democratic lawmakers have criticized in the past for favoring corporations and the wealthiest Americans. She emphasized that, along with the union leaders present at the roundtable, effective policies are ones that help working people in the country."Mr. President, labor cares about student-loan debt," Warren added.Even before Warren became a lawmaker, she was looking into the student-loan industry as she helped establish the Consumer Financial Protection Bureau, and as a senator, she worked with the agency to uncover abuses by student-loan companies that pushed borrowers into taking on more debt than they could afford to pay off. She's also been one of the leading lawmakers pushing President Joe Biden to forgive $50,000 in student debt per borrower — something she proposed during her presidential campaign, but has yet to come to fruition.Currently, Biden is reportedly considering $10,000 in relief for borrowers making under $150,000 a year, and the final decision will likely be announced in July or August, closer to when the student-loan payment pause expires after August 31. Warren, and some of her Democratic colleagues, believe that $50,000 is the amount that will get the most relief to the most people while helping to close the racial wealth gap. While Democrats are asking Biden to prioritize this issue and use his executive authority to reduce the burden of student debt, Republican lawmakers have slammed the idea, saying the president should not relieve debt for all federal borrowers. Top Republican on the House education committee Virginia Foxx recently said Biden "operates as if he can issue any decree he wants on student loan forgiveness, even if it means exercising authority that he does not have."Biden has not publicly confirmed an amount of relief, but he told reporters over the weekend he is nearing a final decision, and a further extension of the pause on payment is still on the table. Rep. Ayanna Pressley, who joined Warren at the Wednesday roundtable, hopes that the relief will be significant and alleviate the debt burden for as many Americans as possible."There's no shame in struggle," Pressley said. "The shame is that we're not doing everything in our power to alleviate the burden of that struggle."Read the original article on Business Insider.....»»

Category: personnelSource: nytJun 23rd, 2022

Biden is drawing closer to a decision on student-debt forgiveness. Here"s everything he"s done so far to address the $1.7 trillion crisis.

From extending the student-loan payment pause to cancelling student debt for some borrowers, here's everything Biden has done on student debt to date. Shutterstock.com Since Biden took office, he's taken a number of actions to address the $1.7 trillion student-debt crisis. They include cancelling debt for borrowers with disabilities and extending the payment pause on loans.  Democrats are pushing for him to cancel $50,000 in student debt per person, which the DOJ is reviewing. Forty-five million Americans have a $1.7 trillion student-debt burden in the country. And many of them, alongside Democrats and advocates, want President Joe Biden to forgive $50,000 of their debt.He hasn't done that yet, but the president has taken steps to lessen the burden and provide relief during the pandemic.As one of his first actions in office, Biden extended the pause on student-loan payments, coupled with zero growth in interest, to ensure borrowers suffering financially would not have to worry about paying off their loans.Since then, Education Secretary Miguel Cardona has cancelled billions in student debt for borrowers with disabilities and borrowers defrauded by for-profit schools. He's also started conducting reviews of student loan forgiveness programs that don't work as they should.But Democrats want Biden to do more.They have been keeping the pressure on the president to cancel $50,000 in student debt per person using his executive authority. Biden has expressed hesitancy to do so, and although he has asked the Education and Justice Departments to review his executive abilities to wipe out that debt, Democrats remain adamant that he can, and should, cancel student debt immediately with the flick of a pen."Student loan cancellation could occur today," Massachusetts Sen. Elizabeth Warren told Insider. "The president just needs to sign a piece of paper canceling that debt. It doesn't take any act of Congress or any amendment to the budget."Detailed below is everything Biden has done to date to confront the student debt crisis:Extended the pause on student-loan paymentsEvan Vucci/APOn his first day in office, Biden asked the Education Department to extend the pause on federal student loan payments through September 30, 2020, following Education Secretary Betsy DeVos' extension of it through the end of January 2020. This was accompanied by a 0% interest rate during that time period.National Economic Council Director Brian Deese said at the time that the extension would alleviate burdens on many households. "In this moment of economic hardship, we want to reduce the burden of these financial trade-offs," Deese said.This extension, however did not apply to the more than 7 million borrowers with loans held by private companies. In August, nearly two months before the pause was set to expire, Education Secretary Miguel Cardona announced the pause would be extended through January 31, 2022. This is the fourth extension of the pause during the pandemic, and Cardona said in a statement that it will be the "final" one."The payment pause has been a lifeline that allowed million of Americans to focus on their families, health, and finances  instead of student loans during the national emergency," Cardona said.Despite the "final" language, though, Biden surprised borrowers on December 22 when he extended the pause through May 1, allowing for 3 months of additional relief. This pause was due to rising COVID-19 cases caused by the Omicron variant. And on April 5, 2022, Biden used his authority for his fourth time to once again extend the student-loan payment pause an additional four months, through August 31. He said that the country is still recovering from the pandemic, and forcing borrowers to resume payments will disrupt recovery and cause many borrowers to fall into delinquency and default. Expanded the scope of the student loan payment pauseReuters/Andrew BurtonBiden's payments pause on student loans initially only applied to borrowers with federal loans, meaning those with privately-held loans had to continue making payments during the pandemic.But on March 29, Cardona expanded the scope of that pause to apply to loans under the Federal Family Education Loan (FFEL) Program, which are privately held. This helped 1.14 million additional borrowers. The FFEL Program ended in 2010, but according to Education Department data, 11.2 million borrowers still have outstanding FFEL loans totaling over $248 billion. And while the department acquired some of the outstanding FFEL loans, many are still privately owned and were not affected by the earlier pause on federally owned student loan payments.According to a press release, any FFEL borrower who made a payment in the past year will have the option to request a refund. Asked the Justice and Education Departments to review his authority to cancel student debtREUTERS / Jonathan ErnstAt a CNN town hall in February, Biden said he doesn't have the executive authority to cancel up to $50,000 in student debt per person, but said he is prepared to cancel $10,000 — something he campaigned on. The same month, White House Press Secretary Jen Psaki told reporters that Biden will ask the Justice Department to review his legal authority to cancel $50,000 in student debt. Biden's administration has not yet commented on the status of the Justice Department's review.However, Insider reported that he has yet to deliver on that campaign promise, and while Biden said he would support legislation brought to him to cancel $10,000 in student debt, Democrats argue that legislation takes too long, and the president can cancel debt immediately using his executive authority."We have a lot on our plate, including moving to infrastructure and all kinds of other things," Warren said in a February press call. "I have legislation to do it, but to me, that's just not a reason to hold off. The president can do this, and I very much hope that he will."And White House Chief of Staff Ron Klain told Politico in April that Biden had asked Cardona to create a memo on the president's legal authority to forgive $50,000 in student loans per person.Biden will "look at that legal authority," Klain said. "He'll look at the policy issues around that, and he'll make a decision. He hasn't made a decision on that either way, and, in fact, he hasn't yet gotten the memos that he needs to start to focus on that decision."Reversed a DeVos methodology for determining loan forgivenessSecretary of Education Betsy DeVos.Alex Wong/Getty ImagesOn March 18, Cardona reversed a Trump-era policy that gave only partial relief to defrauded students.The debt-cancellation methodology, known as the "borrower defense to repayment" — approved by Education Secretary Betsy DeVos — compared the median earnings of graduates with debt-relief claims to the median earnings of graduates in comparable programs. The bigger the difference, the more relief the applicant would receive.But compared to a 99.2% approval rate for defrauded claims filed under President Barack Obama, DeVos had a 99.4% denial rate for borrowers and ran up a huge backlog of claims from eligible defrauded borrowers seeking student debt forgiveness.Cardona said that process did not result in appropriate relief determination and needed to be reversed, and a judge recently ruled that DeVos must testify over why so few borrowers were approved for loan forgiveness.Cancelled student debt for some defrauded borrowersNirat.pix/Getty ImagesSo far, Cardona has cancelled over $7 billion in student debt for borrowers defrauded by for-profit schools.For-profit institutions that shut down years ago, such as Corinthian Colleges and ITT Technical Institutes, were accused of violating federal law by persuading their students to take out loans, and Cardona's new policy helped approximately 72,000 of those students receive $1 billion in loan cancellation in March."Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution's misconduct," Cardona said in a statement. "A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt."On June 16, Cardona cancelled student debt for 18,000 additional borrowers defrauded by ITT Technical Institutes, totaling to about $500 million in debt relief.The Education Department announced in a press release that 18,000 borrowers who attended ITT Tech will get 100% of their student debt forgiven, and the department will begin notifying borrowers of their approvals for loan forgiveness in the coming weeks and will work quickly to discharge those borrowers' loan balances."Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them," Cardona said in a statement.An additional 115,000 defrauded ITT borrowers got $1.1 billion in student debt relief on August 26, applicable for those who did not complete their degree and left ITT on or after March 31, 2008.In the first time since 2017 that borrower defense claims have been approved for borrowers outside of ITT Tech, Corinthian Colleges, and American Career Institute, on July 9, Cardona cancelled student debt for 1,800 borrowers who attended the for-profit schools Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute.More recently, 16,000 more borrowers — including 1,800 former DeVry University students — received $415 million in relief on February 17 after being subject to the school's fraudulent behavior, and on April 28, Cardona wiped out student debt for an additional 28,000 borrowers from Marinello, totaling $238 million in relief.And in the department's biggest action on borrower defense to date, it announced on June 1 that it would be wiping out the remaining $5.8 billion in student debt for 560,000 borrowers defrauded by Corinthian Colleges. This was a group discharge and impacts those who did not submit applications themselves. Cancelled student debt for some borrowers with disabilitiesGetty Images / Dan KitwoodOn March 29, Cardona cancelled $1.3 billion of student debt for about 41,000 borrowers with disabilities.He also waived an Obama-era requirement for those borrowers to submit documentation during a three-year monitoring period to verify that their incomes did not exceed the poverty line of $12,880 annually for a single person.A 2016 report from the Government Accountability Office found that 98% of reinstated disability discharges occurred because borrowers did not submit the required documentation — not because their incomes were too high."Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency," Cardona said in a statement. "Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork."But experts said this action did not make up for the significant number of borrowers who never received loan forgiveness simply due to paperwork."Today's announcement is not cause for celebration but rather for outrage," Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said in a statement at the time. "It is scandalous that the Department revoked the loan discharges for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic."Then, on August 19, Cardona wiped out student debt for 323,000 additional borrowers with disabilities, resulting in $5.8 billion in student-debt relief, and he "indefinitely" waived the requirement to provide proof of income."We've heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it," Cardona said. "This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support."Cardona also said the department will consider further waiving the three-year monitoring period.Started a review of student-loan forgiveness programsSuzanne Kreiter/The Boston Globe via Getty ImagesOn May 24, the Education Department announced it is beginning the process of issuing new higher education regulations, mainly concerning student debt-forgiveness programs. The first step of the process will be through holding hearings in June to receive feedback on "regulations that would address gaps in postsecondary outcomes, such as retention, completion, student loan repayment, and loan default," according to a press release.The department will also seek comments on rules regarding student loan forgiveness for borrowers in public service and borrowers with disabilities, among other things.The main topics the department plans to address concern the methods for forgiving debt for defrauded borrowers and borrowers with disabilities, along with looking into the Public Service Loan Forgiveness (PSLF) program, which has rejected 98% of eligible borrowers. Forbes reported that the process to implement new rules could be lengthy, though. After the hearings in June, there will be "negotiated rulemaking," during which stakeholders meet with the department to review proposed regulations, and it could take a year or longer until changes are implemented. Biden's regulatory agenda also included plans to review loan forgiveness programs, but Insider reported on June 15 that details for those reviews remain unclear, and an Education Department spokesperson told Insider there is not yet a timeline for when improvements will be implemented. Waived interest on student loans for service membersMembers of the United States Marine Corps stand listening to the 45th President Donald J. Trump's address of the crowd for the opening ceremony of the New York City 100th annual Veterans Day Parade and wreath-laying at the Eternal Light Flag Staff.Ira L. Black/Corbis via Getty ImagesThe Education Department announced on August 20 that 47,000 former and active-duty service members will get the interest on their student loans retroactively waived.The relief will happen automatically, removing the requirement for service members to make individual requests to access the benefit, which, according to the press release, will make service members eight times more likely to receive the benefit than in 2019."Brave men and women in uniform serving our country can now focus on doing their jobs and coming home safely, not filling out more paperwork to access their hard-earned benefits," FSA Chief Operating Officer Richard Cordray said in a statement. "Federal Student Aid is grateful for our strong partnership with the Department of Defense, and we will seek to reduce red tape for service members wherever possible."Service members deployed to areas that qualify them for "imminent danger or hostile fire pay," according to the Higher Education Act, should not accrue interest on student loans that were first disbursed on or after October 1, 2008. But since the process was not previously automated, only a small proportion of eligible service members were able to access the benefit, with only about 4,800 of them getting relief in 2019.Overhauled a student-loan forgiveness program for public servantsAndreas Rentz/Getty ImagesThe Education Department on October 6 announced a major overhaul of the Public Service Loan Forgiveness (PSLF) program. It's supposed to wipe out student debt for public servants after 120 qualifying monthly payments, but to date it has rejected 98% of applicants due to deep flaws within the program.According to the department's press release, it will implement a limited-time waiver through October 31, 2022, that will allow borrowers to count payments from any federal loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.The department said this waiver alone would bring 550,000 borrowers closer to student-debt relief automatically, including 22,000 borrowers who will be immediately eligible for relief without any action on their part, totaling $1.74 billion in forgiveness. An additional 27,000 borrowers could also qualify for $2.82 billion in forgiveness if they certify additional periods of employment."Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," Education Secretary Miguel Cardona said in a statement. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."Other changes, to be rolled out in the next few months, include making payments easier to qualify for the program and reviewing denied applications and correcting errors.On November 11, Cardona announced that a month after the reforms were announced, 10,000 borrowers have already gotten $715 million in student debt wiped out, and 30,000 borrowers will get $2 billion in relief in the coming weeks.And actions announced on April 19 wiped out student debt for 40,000 PSLF borrowers through revisions to payment tracking progress.Gave nearly 8 million student-loan borrowers behind on payments a fresh startU.S. President Joe Biden answers questions after delivering remarks about Russia's “unprovoked and unjustified" military invasion of Ukraine on February 24, 2022.Drew Angerer/Getty ImagesAn additional four months of relief was not the only significant measure in Biden's April announcement. Along with extending the student-loan payment pause for his fourth time, through August 31, the Education Department also announced it will work to give borrowers who were behind on their debt payments — either in default or delinquency — a "fresh start" and return them to good standing before they would have to reenter repayment.This would impact nearly 8 million borrowers who fall into those categories, and the measure also extends to borrowers who have privately-held loans, not just federal. Brought millions of borrowers on income-driven repayment plans closer to reliefCollege graduation.Andy Sacks/Getty ImagesOn April 19, the Education Department announced steps to fix income-driven repayment plans, which are intended to give borrowers affordable debt payments by creating a monthly payment plan based on a borrower's income and family size. It promises loan forgiveness after 20-25 years on the plan.However, recent reports revealed the vast majority of borrowers have been blocked from forgiveness due to failure in tracking payment accurately, which is why the department is taking steps to reform the plans, bringing 3.6 million borrowers closer to relief."Student loans were never meant to be a life sentence, but it's certainly felt that way for borrowers locked out of debt relief they're eligible for," Secretary of Education Miguel Cardona said in a statement. The new actions will include a one-time revision to count any past payments toward loan forgiveness progress, along with issuing new guidance to student-loan companies on modernized ways to track payments accurately.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJun 2nd, 2022

DEBT DIARIES: 24 stories of the student-debt "hamster wheel" that borrowers of all ages and incomes can"t escape

Insider spoke with two dozen student-loan borrowers stuck with huge debt loads. They're a small part of a $1.7 trillion crisis in the US. Marianne Ayala/InsiderThe $1.7 trillion student-debt crisis in the US continues to grow, making the burden heavier for millions of Americans.Since March 2020, as part of pandemic relief measures, federal borrowers have not had to make student-loan payments, and interest on the loans has been waived. President Joe Biden extended the pause for a fourth time, through August 31, citing uncertainty with the pandemic. Advocates and lawmakers lauded the decision and the additional relief for 43 million federal borrowers.But even during the payment pause, many borrowers did not feel relieved. The looming date for restarting payments sparked anxiety and fear among some borrowers who knew that even though they had not been required to pay off their debt over the past two years, they would not be able to afford an additional bill in just a few months. That's why some Democratic lawmakers are calling for Biden to cancel student debt for every federal borrower."More than 40 million Americans have benefited from the federal pause on student-debt payments, but without cancellation they will be buried under a mountain of debt once again," Sen. Elizabeth Warren of Massachusetts told Insider. "The president campaigned on canceling at least $10,000 in student debt, he has the executive authority, and now is the time to deliver."Now, Biden is reportedly considering $10,000 in relief for borrowers making under $150,000 a year, and that announcement is likely to happen in July or August, closer to when payments are set to resume. But that relief could leave some borrowers out, like parents and graduate students, and the amount will not make a huge difference to those with much larger debt loads.Over the past year, Insider has spoken with nearly two dozen borrowers who shared their experiences with the "hamster wheel" of student debt, its impact on their lives and their families, and their fears that their debt will follow them to their graves. Here are their stories.Older people are giving up hope of paying off their student loans before they die: 'There's a real fear in dying in this'Marianne Ayala/InsiderOver 8 million borrowers over 50 hold 22% of the federal student-debt load. The burden can be so heavy that some of those Americans will never see a life without student debt.Three borrowers who fall into that category — David Wise, Linda Navarro, and Theresa Teders — shared how their debt had permanently altered their lives. They said they don't see it going away until they die.Read the full story here.Inside the 'vicious cycle' of spiraling student-loan debt caused by servicers just not picking up the phoneMarianne Ayala/InsiderPaying off student debt is one challenge. Getting help from a student-loan company to actually pay off that debt is a whole other hurdle.Two borrowers, Charles Moore and Lynda Costa, tried to contact the company that collects their debt for assistance with repayment, but hours-long waits and inaccurate information only caused their debt loads to surge even more.Read the full story here.'It's mind-boggling to me that this total amount is not going down. It's not going away': 2 borrowers describe the crushing interest that keeps them from paying off their debtMarianne Ayala/InsiderHigh interest rates are largely to thank for the $1.7 trillion student-debt load in the US, keeping borrowers from paying off balances far higher than what they initially borrowed.Alexandria Mavin and Daniel Tapia are trying to pay off their student debt, but interest keeps adding on to their monthly bills, trapping them in a cycle of repayment.Read the full story here.Meet a married couple with $130,000 in student debt after paying off $140,000 — but they started with just $54,000. 'The loans have always stayed one step ahead of us.'Marianne Ayala/InsiderRon and Marcia Rizzardi are a clear example of the toll that high interest rates can have on student debt loads. The couple started out with a combined $54,000 in debt from their educations, and over the past 25 years they've made $140,000 in payments. Today, they owe $130,000, and they don't see it going away anytime soon.Read the full story here.Meet a single grandmother raising 3 grandchildren with $75,000 in student debt: 'I don't want my grandkids to be in poverty'Marianne Ayala/InsiderGwen Carney, 61, is raising her grandchildren on her own — with $75,000 in student debt. She desperately wants to give her grandkids the lives they deserve, but in order to do so she has to work a full-time job while sewing face masks on the side for some extra cash. The pandemic pause gave her relief, but she worries she won't be able to afford to pay her student debt and support her grandkids when payments resume.Read the full story here.Meet a recent college grad with $143,000 in student debt: 'There have been times when I didn't eat' to afford the paymentsMarianne Ayala/InsiderWhile the student-loan payment pause extended to federal borrowers, those with private student loans continued to see their debt grow.Karla, a recent college graduate, has a student-debt load of $143,000, with $91,000 coming from private loans. Even though she's kept up with her monthly payments, the high interest is keeping her from even touching the amount she originally borrowed.Read the full story here.Meet a single dad with $550,000 in student loans for his 5 children: 'I'm just not going to take the chance on not sending my kids to school'Marianne Ayala/InsiderMillions of parents across the country want their kids to access higher education but can't afford to do so on their own. So they take out Parent PLUS loans on behalf of their children to cover up to the cost of attendance.While it's an easy loan to get, it's very difficult to pay off. Just ask Reid Clark, a 57-year-old single father with $550,000 in student debt for his five children. He said he didn't regret sending his kids to school, but he wished it had been harder for him to take on so much debt.Read the full story here.Meet a 64-year-old dad delaying retirement because of $265,000 in student debt for his 2 kids: 'I was going to do whatever was necessary to get my kids through'Marianne Ayala/InsiderRobert Pemberton wanted his two kids to succeed — and it came at the cost of $265,000 in student debt. He said that although he now makes a livable salary, his debt load became unmanageable after periods of unemployment and his wife's cancer treatment. He isn't sure when he will retire, thanks to the high interest rates on PLUS loans.Read the full story here.Meet a 57-year-old dad with $104,000 in student debt for his son: 'It was my obligation to do the best I could for him'Marianne Ayala/InsiderJeff O'Kelley, 57, has $104,000 in student debt from loans he took out to send his son to college. Like many parents who made the same decision, he said he didn't regret accumulating debt to give his son the best future possible. But he believes the "extraordinarily simple" process he followed to take on debt needs to change.Read the full story here.Meet a 62-year-old veteran with $104,000 in student debt after working in public service for 4 decades: 'I joined the Army to escape poverty. This is a different kind of poverty.'Marianne Ayala/InsiderJeffrey Spencer thought joining the Army in 1976 would give him access to a free education. It didn't, and now, at 62, he has $104,000 in student debt. And while he works for the state of California, which would make him eligible for the Public Service Loan Forgiveness program, failures in the program led to his being denied repeatedly. He said he was tired of broken promises.Read the full story here.Meet a therapist with $81,000 in student debt who worked in public service for 20 years and can't get loan forgiveness: 'People in the helping professions are getting totally screwed over'Marianne Ayala/InsiderSince 2017, when the first group of borrowers became eligible for the Public Service Loan Forgiveness program, which forgives student debt for public servants after 10 years, it's run up a 98% denial rate.Lindsay Averbook, who has $81,000 in student debt, is one of the rejected borrowers. She's worked in public service — in mental-health care — for her whole career, and she said she didn't understand why it's taking so long to get the student debt relief she deserves.Read the full story here.Meet a single mom and adjunct professor with $430,000 in student debt: 'I'm in a hole that I'm never going to get out of'Marianne Ayala/InsiderMaria firmly believes her $430,000 student-debt load was not worth it. She'd thought that pursuing a master's degree and a Ph.D. would land her a job teaching at a university, and she extensively researched the programs and their outcomes to ensure they were worth the cost. But a layoff and medical bills for her daughter's cancer treatment set her on a different course, and she said she sees herself dying with her student debt.Read the full story here.Meet an independent voter with $163,000 in student debt who left the Democratic Party after 4 decades because she felt 'betrayed' by Joe Biden: 'I really felt he was going to help us with the student-loan problem'Marianne Ayala/InsiderAs a presidential candidate, Joe Biden pledged to approve forgiving $10,000 in student loans for every federal borrower. He won Melissa Andretta's vote with that pledge.Andretta, who has $163,000 in student debt, said she'd thought Biden would help with the student-loan crisis in the US, but now she feels "betrayed."Read the full story here.Meet a first-generation college grad with $250,000 in student debt: 'It's the price I had to pay to achieve the American dream'Marianne Ayala/InsiderObtaining a higher education is a pillar of the American dream, and it's one that Juan Antonio Sorto, a first-generation college student, wanted more than anything. The cost of achieving that dream was $250,000 in student debt.Sorto said that while he was proud of his accomplishments and the life his education had given him and his family, he wished President Joe Biden would do more to ensure others don't have to take on so much debt for an education.Read the full story here.Meet a single mom who took on $49,000 in student debt to put one of her 2 daughters through college: 'It's the only way for my kids to get an education and be successful'Marianne Ayala/InsiderDanet Henry, 53, is a single mom of two with a $49,000 student debt load for her oldest daughter. And once her youngest daughter graduates in three years, that balance will likely double. That's because Henry took on PLUS loans — the most expensive type of federal loan — and while she knows she has to pay back her debt, she wishes parents could be included in relief programs.Read the full story here. Meet 2 married couples who are blocked from a student-loan-forgiveness program because they were advised to combine their debts years agoMarianne Ayala/InsiderThe spousal joint loan consolidation program was created in 1993, which allowed married couples to combine their student-debt loads into one loan so they could make just a single monthly payment with one interest rate. The idea is that it's a more affordable option.But over a decade after Congress shuttered the program in 2006, some married couples are stuck in the program and cannot qualify for loan forgiveness because law prohibits them from separating their debt balances. Insider spoke to two couples — all public servants — who were told combining their balances was their best option, but they didn't know their loans would not be eligible for relief.Read the full story here.Meet a teacher with $303,000 in student debt who says Biden's $10,000 loan-forgiveness plan 'is not even a drop in the bucket'Marianne Ayala/InsiderWith Biden considering $10,000 in student-loan forgiveness, borrowers like Cheryl say that won't make a dent in the student debt balances they hold. Cheryl, 53, has $303,000 in student debt — and while she doesn't mind paying back what she borrows, she wishes interest didn't accumulate so quickly.Even if Biden cancels $10,000 in student debt, Cheryl said, she'll probably have to pick up a second job to afford payments when the pause expires after August 31.Read the full story here.A 61-year-old student-loan borrower chooses between paying her debt and paying for health insurance — and Biden's forgiveness plans won't helpMarianne Ayala/InsiderRobin O'Brien, 61,  could not foresee the pandemic when she took out student loans to go to graduate school. There's no way she could have anticipated contracting COVID-19, and the medical bills that came along with it.Now, as Biden gets closer to making a decision on broad student-loan forgiveness, O'Brien is also forced to make a decision: paying her medical bills or her $64,000 student loan bills — and she knows she cannot afford both. She's disappointed graduate students are not being considered in Biden's relief plans.Read the full story here. Read the original article on Business Insider.....»»

Category: dealsSource: nytJun 15th, 2022

How Inflation Got Away From Washington Screw-Ups

How Inflation Got Away From Washington Screw-Ups Authored by MN Gordon via EconomicPrism.com, Sometimes I think of all the places I don’t want to go Then I think of all the things I never want to do Think of all the people I never want to meet I close my eyes and I go to sleep – Green Corn, NOFX Prayers for the ‘Big Guy’ Being a government hack has its advantages.  You get eleven paid holidays per year.  You get promoted for poor performance.  The benefits are superb.  Best of all, you can get remarkably rich…even if you’re a screw up. President Joe Biden, for example, has worked for the federal government for nearly 50 years.  His net worth is about $9 million. Yet Biden and his wife Jill really made the big bucks between 2017 and 2020, when Biden was out of office.  Together, they hauled in $17.3 million in book deals and speaking fees.  These are some of the fringe benefits of having been a government bigwig. The Good Book says we should pray for our leaders. First Timothy 2:1-2 (KJV) offers the explicit spiritual instruction. “I exhort therefore, that, first of all, supplications, prayers, intercessions, and giving of thanks, be made for all men; 2 For kings, and for all that are in authority; that we may lead a quiet and peaceable life in all godliness and honesty.” Here at the Economic Prism we have yet to say a prayer for Joe Biden.  Perhaps we should.  He’s a major screw up.  He’s President of the United States.  And he’s struggling bigtime. According to a recent Reuters/Ipsos opinion poll, Biden’s public approval rating is just 36 percent.  Nothing is going right for the ‘Big Guy.’  Fair or not, Biden gets credit for the botched troop withdrawal from Afghanistan, raging 40 year high consumer price inflation, record gas prices, baby formula shortages, a massive border crisis, and everything else – including Kamala Harris. On top of all that, the economy’s entering a stage of terminal decline.  After 50 years of a maniacal debt fueled spending binge, there’s nowhere left to go but down. And going down is far less pleasant than going up… Extreme Intervention How will Biden respond to 30 percent unemployment in the face of $20 per gallon gasoline? Will he invoke price controls?  Will he penalize oil and gas companies with windfall profits taxes?  Will he cancel student loan debt?  Will he send more weapons overseas? These programs, and many others, are being considered by Biden.  In fact, there’s an endless supply of destructive deals he can – and will – try.  We don’t put anything past him. Because not only is Biden a screw up.  He’s surrounded by screw ups too.  On the economic front this is particularly true… For example, the Environmental Protection Agency (EPA) recently mandated that Americans take more and more of their food and burn it – in the form of corn ethanol – in their gas tanks.  This is a dumb thing to do, even in the best of times.  But in a time of looming food shortages this is absolutely absurd. These are the types of destructive decisions made by people who suffer no consequences for their actions.  They sit in climate controlled offices.  They read and send emails all day.  They attend meetings.  They lead task forces.  They build consensus. Then, they make recommendations.  And agency boards and commissions adopt them.  Before you know it, Americans are required to burn food as fuel and there’s nothing they can do about it. Up and down, in and out of the economy, countless interventions from government are impacting prices.  From the gasoline or lightbulbs you use to subsidizing electric vehicles and healthcare and propping up zombie companies. The government’s finger prints are all over the place…making the prices you pay higher and the quality of goods and services lower. Is Inflation Moral? Now, with inflation raging at a 40 year high, the money masters who started this problem, are tasked with stopping it.  Treasury Secretary Janet Yellen, who was also Federal Reserve Chair from 2014 to 2018, is one of the chief architects of today’s teeth gnashing inflation. She worked in concert with her partner in crime, Fed Chair Jay Powell, to print upwards of $5 trillion between March of 2020 and May of 2022.  Powell created credit from thin air and Yellen supplied the Treasury notes for Powell to buy.  Yellen then delivered this debt based money to Congress so they could spend it into the economy with reckless abandoned. In this respect, Yellen is a special sort of screw up.  She’s not a senile dotard poopy pants screw up like Biden.  Nor is she a dumber than a box of hair screw up like Harris. Yellen, you see, is a faux screw up.  She feigns ignorance and befuddlement over today’s inflation. A year ago, Yellen said there would only be a “small risk” of inflation, and that it would be “manageable.”  Now Yellen says she was “wrong then about the path inflation would take.” The truth is, Yellen loves inflation.  She’s passionate about it.  She’s spent her whole career advocating for it. In 1995, for instance, at a FOMC meeting, Yellen argued in favor of allowing inflation to exceed inflation targets for moral reasons.  Here’s what she said: “To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.” Yellen’s rationale was the tired old argument that inflation stimulates demand, and demand stimulates jobs, and that it’s wise and humane to have low unemployment.  This, however, is merely a feigned justification. How Inflation Got Away from Washington Screw Ups Yellen has spent her career working for the Fed and the Treasury.  She’s a believer in the cause.  And her cause is to stimulate inflation so that Washington can pay back the federal debt with dollars of diminishing value.  In essence, she wants to inflate away the debt. Yet this makes Yellen not just a faux screw up; it makes her a major screw up like Biden.  For Yellen believes she can set the inflation rate like setting an indoor thermostat.  What a fool. Four percent inflation is perhaps what she wanted.  An official inflation rate over 8 percent is what she got. [Editor’s note: At the time of this writing the May CPI report had not been released].  In reality, the inflation rate is more than double what’s officially reported. The point is, trying to set the inflation rate through government intervention is playing with fire.  And playing with fire is a dangerous game. For example, last month’s Hermits Peak-Calf Canyon Fire in New Mexico was the largest fire in the state’s history.  Over 320,000 acres of Santa Fe National Forest were scorched. What you may not know is the fire was started by prescribed burn activities carried out by the U.S. Forest Service.  The service thought it was doing something good.  But somehow it lost control. Yellen, Powell, and the other screw ups at the Fed and Treasury may have thought they were doing something good.  Through policies of extreme currency debasement they thought they were both stimulating the economy and reducing the federal government’s debt burden. Alas, they lost control.  They wanted inflation  to run above target.  Instead, they got an inflationary forest fire. *  *  * Don’t let Washington’s control freak sociopaths destroy everything you’ve worked so hard for.  With inflation burning up your life savings it’s time to take the financial fire escape.  For this reason, I’ve dedicated the past 6-months to researching and identifying simple, practical steps everyday Americans can take to protect their wealth and financial privacy.  The findings of my work are documented in the Financial First Aid Kit.  If you’d like to find out more about this important and unique publication, and how to acquire a copy, stop by here today! Tyler Durden Sat, 06/11/2022 - 13:30.....»»

Category: blogSource: zerohedgeJun 11th, 2022

DEBT DIARIES: 23 stories of the student-debt "hamster wheel" that borrowers of all ages and incomes can"t escape

Insider spoke with nearly two dozen student-loan borrowers stuck with huge debt loads. They're a small part of a $1.7 trillion crisis in the US. Marianne Ayala/InsiderThe $1.7 trillion student-debt crisis in the US continues to grow, making the burden heavier for millions of Americans.Since March 2020, as part of pandemic relief measures, federal borrowers have not had to make student-loan payments, and interest on the loans has been waived. President Joe Biden recently extended the pause for a third time, through May 1, citing uncertainty with the Omicron variant. Advocates and lawmakers lauded the decision and the additional relief for 43 million federal borrowers.But even during the payment pause, many borrowers did not feel relieved. The looming date for restarting payments sparked anxiety and fear among some borrowers who knew that even though they had not been required to pay off their debt over the past two years, they would not be able to afford an additional bill in just a few months. That's why some Democratic lawmakers are calling for Biden to cancel student debt for every federal borrower."More than 40 million Americans have benefited from the federal pause on student-debt payments, but without cancellation they will be buried under a mountain of debt once again," Sen. Elizabeth Warren of Massachusetts told Insider. "The president campaigned on canceling at least $10,000 in student debt, he has the executive authority, and now is the time to deliver."Over the past year, Insider has spoken with nearly two dozen borrowers who shared their experiences with the "hamster wheel" of student debt, its impact on their lives and their families, and their fears that their debt will follow them to their graves. Here are their stories.Older people are giving up hope of paying off their student loans before they die: 'There's a real fear in dying in this'Marianne Ayala/InsiderOver 8 million borrowers over 50 hold 22% of the federal student-debt load. The burden can be so heavy that some of those Americans will never see a life without student debt.Three borrowers who fall into that category — David Wise, Linda Navarro, and Theresa Teders — shared how their debt had permanently altered their lives. They said they don't see it going away until they die.Read the full story here.Inside the 'vicious cycle' of spiraling student-loan debt caused by servicers just not picking up the phoneMarianne Ayala/InsiderPaying off student debt is one challenge. Getting help from a student-loan company to actually pay off that debt is a whole other hurdle.Two borrowers, Charles Moore and Lynda Costa, tried to contact the company that collects their debt for assistance with repayment, but hours-long waits and inaccurate information only caused their debt loads to surge even more.Read the full story here.'It's mind-boggling to me that this total amount is not going down. It's not going away': 2 borrowers describe the crushing interest that keeps them from paying off their debtMarianne Ayala/InsiderHigh interest rates are largely to thank for the $1.7 trillion student-debt load in the US, keeping borrowers from paying off balances far higher than what they initially borrowed.Alexandria Mavin and Daniel Tapia are trying to pay off their student debt, but interest keeps adding on to their monthly bills, trapping them in a cycle of repayment.Read the full story here.Meet a married couple with $130,000 in student debt after paying off $140,000 — but they started with just $54,000. 'The loans have always stayed one step ahead of us.'Marianne Ayala/InsiderRon and Marcia Rizzardi are a clear example of the toll that high interest rates can have on student debt loads. The couple started out with a combined $54,000 in debt from their educations, and over the past 25 years they've made $140,000 in payments. Today, they owe $130,000, and they don't see it going away anytime soon.Read the full story here.Meet a single grandmother raising 3 grandchildren with $75,000 in student debt: 'I don't want my grandkids to be in poverty'Marianne Ayala/InsiderGwen Carney, 61, is raising her grandchildren on her own — with $75,000 in student debt. She desperately wants to give her grandkids the lives they deserve, but in order to do so she has to work a full-time job while sewing face masks on the side for some extra cash. The pandemic pause gave her relief, but she worries she won't be able to afford to pay her student debt and support her grandkids when payments resume.Read the full story here.Meet a recent college grad with $143,000 in student debt: 'There have been times when I didn't eat' to afford the paymentsMarianne Ayala/InsiderWhile the student-loan payment pause extended to federal borrowers, those with private student loans continued to see their debt grow.Karla, a recent college graduate, has a student-debt load of $143,000, with $91,000 coming from private loans. Even though she's kept up with her monthly payments, the high interest is keeping her from even touching the amount she originally borrowed.Read the full story here.Meet a single dad with $550,000 in student loans for his 5 children: 'I'm just not going to take the chance on not sending my kids to school'Marianne Ayala/InsiderMillions of parents across the country want their kids to access higher education but can't afford to do so on their own. So they take out Parent PLUS loans on behalf of their children to cover up to the cost of attendance.While it's an easy loan to get, it's very difficult to pay off. Just ask Reid Clark, a 57-year-old single father with $550,000 in student debt for his five children. He said he didn't regret sending his kids to school, but he wished it had been harder for him to take on so much debt.Read the full story here.Meet a 64-year-old dad delaying retirement because of $265,000 in student debt for his 2 kids: 'I was going to do whatever was necessary to get my kids through'Marianne Ayala/InsiderRobert Pemberton wanted his two kids to succeed — and it came at the cost of $265,000 in student debt. He said that although he now makes a livable salary, his debt load became unmanageable after periods of unemployment and his wife's cancer treatment. He isn't sure when he will retire, thanks to the high interest rates on PLUS loans.Read the full story here.Meet a 57-year-old dad with $104,000 in student debt for his son: 'It was my obligation to do the best I could for him'Marianne Ayala/InsiderJeff O'Kelley, 57, has $104,000 in student debt from loans he took out to send his son to college. Like many parents who made the same decision, he said he didn't regret accumulating debt to give his son the best future possible. But he believes the "extraordinarily simple" process he followed to take on debt needs to change.Read the full story here.Meet a 62-year-old veteran with $104,000 in student debt after working in public service for 4 decades: 'I joined the Army to escape poverty. This is a different kind of poverty.'Marianne Ayala/InsiderJeffrey Spencer thought joining the Army in 1976 would give him access to a free education. It didn't, and now, at 62, he has $104,000 in student debt. And while he works for the state of California, which would make him eligible for the Public Service Loan Forgiveness program, failures in the program led to his being denied repeatedly. He said he was tired of broken promises.Read the full story here.Meet a therapist with $81,000 in student debt who worked in public service for 20 years and can't get loan forgiveness: 'People in the helping professions are getting totally screwed over'Marianne Ayala/InsiderSince 2017, when the first group of borrowers became eligible for the Public Service Loan Forgiveness program, which forgives student debt for public servants after 10 years, it's run up a 98% denial rate.Lindsay Averbook, who has $81,000 in student debt, is one of the rejected borrowers. She's worked in public service — in mental-health care — for her whole career, and she said she didn't understand why it's taking so long to get the student debt relief she deserves.Read the full story here.Meet a single mom and adjunct professor with $430,000 in student debt: 'I'm in a hole that I'm never going to get out of'Marianne Ayala/InsiderMaria firmly believes her $430,000 student-debt load was not worth it. She'd thought that pursuing a master's degree and a Ph.D. would land her a job teaching at a university, and she extensively researched the programs and their outcomes to ensure they were worth the cost. But a layoff and medical bills for her daughter's cancer treatment set her on a different course, and she said she sees herself dying with her student debt.Read the full story here.Meet an independent voter with $163,000 in student debt who left the Democratic Party after 4 decades because she felt 'betrayed' by Joe Biden: 'I really felt he was going to help us with the student-loan problem'Marianne Ayala/InsiderAs a presidential candidate, Joe Biden pledged to approve forgiving $10,000 in student loans for every federal borrower. He won Melissa Andretta's vote with that pledge.Andretta, who has $163,000 in student debt, said she'd thought Biden would help with the student-loan crisis in the US, but now she feels "betrayed."Read the full story here.Meet a first-generation college grad with $250,000 in student debt: 'It's the price I had to pay to achieve the American dream'Marianne Ayala/InsiderObtaining a higher education is a pillar of the American dream, and it's one that Juan Antonio Sorto, a first-generation college student, wanted more than anything. The cost of achieving that dream was $250,000 in student debt.Sorto said that while he was proud of his accomplishments and the life his education had given him and his family, he wished President Joe Biden would do more to ensure others don't have to take on so much debt for an education.Read the full story here.Meet a single mom who took on $49,000 in student debt to put one of her 2 daughters through college: 'It's the only way for my kids to get an education and be successful'Marianne Ayala/InsiderDanet Henry, 53, is a single mom of two with a $49,000 student debt load for her oldest daughter. And once her youngest daughter graduates in three years, that balance will likely double. That's because Henry took on PLUS loans — the most expensive type of federal loan — and while she knows she has to pay back her debt, she wishes parents could be included in relief programs.Read the full story here. Meet 2 married couples who are blocked from a student-loan-forgiveness program because they were advised to combine their debts years agoMarianne Ayala/InsiderThe spousal joint loan consolidation program was created in 1993, which allowed married couples to combine their student-debt loads into one loan so they could make just a single monthly payment with one interest rate. The idea is that it's a more affordable option.But over a decade after Congress shuttered the program in 2006, some married couples are stuck in the program and cannot qualify for loan forgiveness because law prohibits them from separating their debt balances. Insider spoke to two couples — all public servants — who were told combining their balances was their best option, but they didn't know their loans would not be eligible for relief.Read the full story here.Meet a teacher with $303,000 in student debt who says Biden's $10,000 loan-forgiveness plan 'is not even a drop in the bucket'Marianne Ayala/InsiderWith Biden considering $10,000 in student-loan forgiveness, borrowers like Cheryl say that won't make a dent in the student debt balances they hold. Cheryl, 53, has $303,000 in student debt — and while she doesn't mind paying back what she borrows, she wishes interest didn't accumulate so quickly.Even if Biden cancels $10,000 in student debt, Cheryl said, she'll probably have to pick up a second job to afford payments when the pause expires after August 31.Read the full story here.Read the original article on Business Insider.....»»

Category: personnelSource: nytJun 7th, 2022

Recession, Prices, & The Final Crack-Up Boom

Recession, Prices, & The Final Crack-Up Boom Authored by Alasdair Macleod via GoldMoney.com, Initiated by monetarists, the debate between an outlook for inflation versus recession intensifies. We appear to be moving on from the stagflation story into outright fears of the consequences of monetary tightening and of interest rate overkill. In common with statisticians in other jurisdictions, Britain’s Office for Budget Responsibility is still effectively saying that inflation of prices is transient, though the prospect of a return towards the 2% target has been deferred until 2024. Chancellor Sunak blithely accepts these figures to justify a one-off hit on oil producers, when, surely, with his financial expertise he must know the situation is likely to be very different from the OBR’s forecasts. This article clarifies why an entirely different outcome is virtually certain. To explain why, the reasonings of monetarists and neo-Keynesians are discussed and the errors in their understanding of the causes of inflation is exposed. Finally, we can see in plainer sight the evolving risk leading towards a systemic fiat currency crisis encompassing banks, central banks, and fiat currencies themselves. It involves understanding that inflation is not rising prices but a diminishing purchasing power for currency and bank deposits, and that the changes in the quantity of currency and credit discussed by monetarists are not the most important issue. In a world awash with currency and bank deposits the real concern is the increasing desire of economic actors to reduce these balances in favour of an increase in their ownership of physical assets and goods. As the crisis unfolds, we can expect increasing numbers of the public to attempt to reduce their cash and bank deposits with catastrophic consequences for their currencies’ purchasing power. That being so, we appear to be on a fast track towards a final crack-up boom whereby the public attempts to reduce their holdings of currency and bank deposits, evidenced by selected non-financial asset and basic consumer items prices beginning to rise rapidly. Introduction In the mainstream investment media, the narrative for the economic outlook is evolving. From inflation, by which is commonly meant rising prices, the MSIM say we now face the prospect of recession. While dramatic, current inflation rates are seen to be a temporary phenomenon driven by factors such as Russian sanctions, Chinese covid lockdowns, component shortages and staffing problems. Therefore, it is said, inflation remains transient — it’s just that it will take a little longer than originally thought by Jay Powell to return to the 2% target. We were reminded of this in Britain last week when Chancellor Sunak delivered his “temporary targeted energy profits levy”, which by any other name was an emergency budget. Note the word “temporary”. This was justified by the figures from the supposedly independent Office for Budget Responsibility. The OBR still forecasts a return to 2% price inflation but deferred until early 2024 after a temporary peak of 9%. Therefore, the OBR deems it is still transient. Incidentally, the OBR’s forecasting record has been deemed by independent observers as “really terrible”. Absolved himself of any responsibility for the OBR’s inflation estimates, Sunak is spending £15bn on subsidies for households’ fuel costs, claiming to recover it from oil producers on the argument that they are enjoying an unexpected windfall, courtesy of Vladimir Putin, to be used to finance a one-off temporary situation. That being the case, don’t hold your breath waiting for Shell and BP to submit a bill to Sunak for having to write off their extensive Russian investments and distribution businesses because of UK government sanctions against Russia. But we digress from our topic, which is about the future course of prices, more specifically the unmeasurable general price level in the context of economic prospects. And what if the OBR’s figures, which are like those of all other statist statisticians in other jurisdictions, turn out to be hideously wrong? There is no doubt that they and the MSIM are clutching at a straw labelled “hope”. Hope that a recession will lead to lower consumer demand taking the heat out of higher prices. Hope that Putin’s war will end rapidly in his defeat. Hope that Western sanctions will collapse the Russian economy. Hope that supply chains will be rapidly restored to normal. But even if all these expectations turn out to be true, old-school economic analysis unbiased by statist interests suggests that interest rates will still have to go significantly higher, bankrupting businesses, governments, and even central banks overloaded with their QE-derived portfolios. The establishment, the mainstream media and government agencies are deluding themselves over prospects for prices. Modern macroeconomics in the form of both monetarism and Keynesianism is not equipped to understand the economic relationships that determine the future purchasing power of fiat currencies. Taking our cue from the stagflationary seventies, when Keynesianism was discredited, and Milton Friedman of the Chicago monetary school came to prominence, we must critically examine both creeds. In this article we look at what the monetarists are saying, then the neo-Keynesian mainstream approach, and finally the true position and the outcome it is likely to lead to. Since monetarists are now warning that a slowdown in credit creation is tilting dangers away from inflation towards recession, we shall consider the errors in the monetarist approach first. Monetary theory has not yet adapted itself for pure fiat Monetarist economists are now telling us that the growth of money supply is slowing, pointing to a recession. But that is only true if all the hoped-for changes in prices comes from the side of goods and services and not that of the currency. No modern monetarist appears to take that into account in his or her analysis of price prospects, bundling up this crucial issue in velocity of circulation. This is why they often preface their analysis by assuming there is no change in velocity of circulation. While they have turned their backs on sound money, which can only be metallic gold or silver and their credible substitutes, their analysis of the relationship between currency and prices has not been adequately revised to account for changes in the purchasing power of pure fiat currencies. It is vitally important to understand why it matters. A proper gold coin exchange standard turns a currency into a gold substitute, which the public is almost always content to hold through cycles of bank credit. While there are always factors that alter the purchasing power of gold and its relationship with its credible substitutes, the purchasing power of a properly backed currency and associated media in the form of notes and bank deposits varies relatively little compared with our experience today, particularly if free markets permit arbitrage between different currencies acting as alternative gold substitutes. This is demonstrated in Figure 1 below of the oil price measured firstly in gold-grammes and currencies under the Bretton Woods agreement until 1971, and then gold-grammes and pure fiat currencies subsequently. The price stability, while economic actors accepted that the dollar was tied to gold and therefore a credible substitute along with the currencies fixed against it, was evident before the Bretton Woods agreement was suspended. Yet the quantity of currency and deposits in dollars and sterling expanded significantly during this period, more so for sterling which suffered a devaluation against the dollar in 1967. The figures for the euro before its creation in 2000 are for the Deutsche mark, which by following sounder money policies while it existed explains why the oil price in euros is recorded as not having risen as much as in sterling and the dollar. The message from oil’s price history is that volatility is in fiat currencies and not oil. In gold-grammes there has been remarkably little price variation. Therefore, the pricing relationship between a sound currency backed by gold differs substantially from the fiat world we live with today, and there has been very little change in monetarist theory to reflect this fact beyond mere technicalities. The lesson learned is that under a gold standard, an expansion of the currency and bank deposits is tolerated to a greater extent than under a pure fiat regime. But an expansion of the media of exchange can only be tolerated within limits, which is why first the London gold pool failed in the late 1960s and then the Bretton Woods system was abandoned in 1971. Under a gold standard, an expansion of the quantity of bank credit will be reflected in a currency’s purchasing power as the new media is absorbed into general circulation. But if note-issuing banks stand by their promise to offer coin conversion to allcomers that will be the extent of it and economic actors know it. This is the basis behind classical monetarism, which relates with Cantillon’s insight about how new money enters circulation, driving up prices in its wake. From John Stuart Mill to Irving Fisher, it has been mathematically expressed and refined into the equation of exchange. In his earlier writings, even Keynes understood monetarist theory, giving an adequate description of it in his Tract on Monetary Reform, written in 1923 when Germany’s papiermark was collapsing. But even under the gold standard, the monetarist school failed to incorporate the reality of the human factor in their equation of exchange, which has since become a glaring omission with respect to fiat currency regimes. Buyers and sellers of goods and services do not concern themselves with the general price level and velocity of circulation; they are only concerned with their immediate and foreseeable needs. And they are certainly unaware of changes in the quantity of currency and credit and the total value of past transactions in the economy. Consumers and businesses pay no attention to these elements of the fundamental monetarist equation. In essence, this is the disconnection between monetarism and catallactic reality. Instead, the equation of exchange is made to always balance by the spurious concept of velocity of circulation, a mental image of money engendering its own utility rather than being simply a medium of exchange between buyers and sellers of goods and services. And mathematicians who otherwise insist on the discipline of balance in their equations are seemingly prepared in the field of monetary analysis to introduce a variable whose function is only to ensure the equation always balances when without it, it does not. Besides monetarism failing to account for the human actions of consumers and businesses, over time there have been substantial shifts in how money is used for purposes not included in consumer transactions — the bedrock of consumer price indices and of gross domestic product. The financialisation of the US and other major economies together with the manufacture of consumer and intermediate goods being delegated to emerging economies have radically changed the profiles of the US and the other G7 economies. To assume, as the monetarists do, that the growth of money supply can be applied pro rata to consumer activity is a further error because much of the money supply does not relate to prices of goods and services. Furthermore, when cash and bank deposits are retained by consumers and businesses, for them they represent the true function of money, which is to act as liquidity for future purchases. They are not concerned with past transactions. Therefore, the ratio of cash and instant liquidity to anticipated consumption is what really matters in determining purchasing power and cannot be captured in the equation of exchange. Monetarists have stuck with an equation of exchange whose faults did not matter materially under proper gold standards. Besides ignoring the human element in the marketplace, their error is now to persist with the equation of exchange in a radically different fiat environment. The role of cash and credit reserves In their ignorance of the importance of the ratio between cash and credit relative to prospective purchases of goods and services, all macroeconomists commit a major blunder. It allows them to argue inaccurately that an economic slowdown triggered by a reduction in the growth of currency and credit will automatically lead to a fall in the rate of increase in the general price level. Having warned central banks earlier of the inflation problem with a degree of success, this is what now lies behind monetarists’ forecasts of a sharp slowdown in the rate of price increases. A more realistic approach is to try to understand the factors likely to affect the preferences of individuals within a market society. For individuals to be entirely static in their preferences is obviously untrue and they will respond as a cohort to the changing economic environment. It is individuals who set the purchasing power of money in the context of their need for a medium of exchange — no one else does. As Ludwig von Mises put it in his Critique of Interventionism: “Because everybody wishes to have a certain amount of cash, sometimes more sometimes less, there is a demand for money. Money is never simply in the economic system, in the national economy, it is never simply circulating. All the money available is always in the cash holdings of somebody. Every piece of money may one day — sometimes oftener, sometimes more seldom — pass from one man’s cash holding to another man’s ownership. At every moment it is owned by somebody and is a part of his cash holdings. The decisions of individuals regarding the magnitude of their cash holdings constitute the ultimate factor in the formation of purchasing power.” For clarification, we should add to this quotation from Mises that cash and deposits include those held by businesses and investors, an important factor in this age of financialisation. Aside from fluctuations in bank credit, units of currency are never destroyed. It is the marginal demand for cash that sets it value, its purchasing power. It therefore follows that a relatively minor shift in the average desire to hold cash and bank deposits will have a disproportionate effect on the currency’s purchasing power. Central bankers’ instincts work to maintain levels of bank credit, replacing it with central bank currency when necessary. Any sign of a contraction of bank credit, which would tend to support the currency’s purchasing power, is met with an interest rate reduction and/or increases in the note issue and in addition today increases of bank deposits on the central bank’s balance sheet through QE. The expansion of global central bank balance sheets in this way has been mostly continuous following the Lehman crisis in 2008 until March, since when they began to contract slightly in aggregate — hence the monetarists’ warnings of an impending slowdown in the rate of price inflation. But the slowdown in money supply growth is small beer compared with the total problem. The quantity of dollar notes and bank deposits has tripled since the Lehman crisis and GDP has risen by only two-thirds. GDP does not account for all economic transactions — trading in financial assets is excluded from GDP along with that of most used goods. Even allowing for these factors, the quantity of currency liquidity for economic actors must have increased to unaccustomed levels. This is further confirmed by the Fed’s reverse repo balances, which absorb excess liquidity of currency and credit currently standing at about $2 trillion, which is 9% of M2 broad money supply. In all Western jurisdictions, consuming populations are collectively seeing their cash and bank deposits buy less today than in the past. Furthermore, with prices rising at the fastest rate seen in decades, they see little or no interest compensation for retaining balances of currencies losing purchasing power. In these circumstances and given the immediate outlook for prices they are more likely to seek to decrease their cash and credit balances in favour of acquiring goods and services, even when they are not for immediate use. The conventional solution to this problem is the one deployed by Paul Volcker in 1980, which is to raise interest rates sufficiently to counter the desire of economic actors to reduce their spending liquidity. The snag is that an increase in the Fed funds rate today sufficient to restore faith in holding bank deposits would have to be to a level which would generate widespread bankruptcies, undermine government finances, and even threaten the solvency of central banks, thereby bringing forward an economic and banking crisis as a deliberate act of policy. The egregious errors of the neo-Keynesian cohort Unlike the monetarists, most neo-Keynesians have discarded entirely the link between the quantity of currency and credit and their purchasing power. Even today, it is neo-Keynesians who dominate monetary and economic policy-making, though perhaps monetarism will experience a policy revival. But for now, with respect to inflation money is rarely mentioned in central bank monetary committee reports. The errors in what has evolved from macroeconomic pseudo-science into beliefs based on a quicksand of assumptions are now so numerous that any hope that those in control know what they are doing must be rejected. The initial error was Keynes’s dismissal of Say’s law in his General Theory by literary legerdemain to invent macroeconomics, which somehow hovers over economic reality without being governed by the same factors. From it springs the belief that the state knows best with respect to economic affairs and that all the faults lie with markets. Every time belief in the state’s supremacy is threatened, the Keynesians have sought to supress the evidence offered by markets. Failure at a national level has been dealt with by extending policies internationally so that all the major central banks now work together in group-thinking unison to control markets. We have global monetary coordination at the Bank for International Settlements. And at the World Economic Forum which is trying to muscle in on the act we now see neo-Marxism emerge with the desire for all property and personal behaviour to be ceded to the state. As they say, “own nothing and you will be happy”. The consequence is that when neo-Keynesianism finally fails it will be a global crisis and there will be no escape from the consequences in one’s own jurisdiction. The current ideological position is that prices are formed by the interaction of supply and demand and little else. They make the same error as the monetarists in assuming that in any transaction the currency is constant and all the change in prices comes from the goods side: money is wholly objective, and all the price subjectivity is entirely in the goods. This was indeed true when money was sound and is still assumed to be the case for fiat currencies by all individuals at the point of transaction. But it ignores the question over a currency’s future purchasing power, which is what the science of economics should be about. The error leads to a black-and-white assumption that an economy is either growing or it is in recession — the definitions of which, like almost all things Keynesian, are somewhat fluid and indistinct. Adherents are guided religiously by imperfect statistics which cannot capture human action and whose construction is evolved to support the monetary and economic policies of the day. It is a case of Humpty Dumpty saying, “It means what I chose it to mean —neither more nor less” Lewis Caroll fans will know that Alice responded, “The question is whether you can make words mean so many different things”. To which Humpty replied,” The question is which is to be master —that’s all.” So long as the neo-Keynesians are Masters of Policy their imprecisions of definition will guarantee and magnify an eventual economic failure. The final policy crisis is approaching Whether a macroeconomist is a monetarist or neo-Keynesian, the reliance on statistics, mathematics, and belief in the supremacy of the state in economic and monetary affairs ill-equips them for dealing with an impending systemic and currency crisis. The monetarists argue that the slowdown in monetary growth means that the danger is now of a recession, not inflation. The neo-Keynesians believe that any threat to economic growth from the failures of free markets requires further stimulation. The measure everyone uses is growth in gross domestic product, which only reflects the quantity of currency and credit applied to transactions included in the statistic. It tells us nothing about why currency and credit is used. Monetary growth is not economic progress, which is what increases a nation’s wealth. Instead, self-serving statistics cover up the transfer of wealth from the producers in an economy to the unproductive state and its interests through excessive taxation and currency debasement, leaving the entire nation, including the state itself eventually, worse off. For this reason, attempts to increase economic growth merely worsen the situation, beyond the immediate apparent benefits. There will come a point when the public wakes up to the illusion of monetary debasement. Until recently, there has been little evidence of this awareness, which is why the monetarists have been broadly correct about the price effects of the rapid expansion of currency and credit in recent years. But as discussed above, the expansion of currency and bank deposits has been substantially greater than the increase in GDP, which despite its direction into financial speculation and other activities outside GDP has led to an accumulation of over $2 trillion of excess liquidity no one wants in US dollar reverse repos at the Fed. The growth in the level of personal liquidity and credit available explains why the increase in the general price level for goods and services has lagged the growth of currency and deposits, because at the margin since the Lehman crisis the public, including businesses and financial entities, has been accumulating additional liquidity instead of buying goods. This accelerated during covid lockdowns to be subsequently released in a wave of excess demand, fuelling a sharp rise in the general level of prices, not anticipated by the monetary authorities who immediately dismissed the rise as transient. The build-up of liquidity and its subsequent release into purchases of goods is reflected in the savings rate for the US shown in Figure 2 below. The personal saving rate does not isolate from the total the accumulating level of spending liquidity as opposed to that allocated for investment. The underlying level of personal liquidity will have accumulated over time as a part of total personal savings in line with the growth of currency and bank deposits since the Lehman crisis. The restrictions on spending behaviour during lockdowns in 2020 and 2021 exacerbated the situation, forcing a degree of liquidity reduction which drove the general level of prices significantly higher. Profits and losses resulting from dealing in financial assets and cryptocurrencies are not included in the personal savings rate statistics either. This matters to the extent that bank credit is used to leverage investment. Nor is the accumulation of cash in corporations and financial entities, which are a significant factor. But whatever the level of it, there can be little doubt that the levels of liquidity held by economic actors are unaccustomedly high. The accumulation of reverse repos representing unwanted liquidity informs us that the public, including businesses, are so sated with excess liquidity that they may already be trying to reduce it, particularly if they expect further increases in prices. In that event they will almost certainly bring forward future purchases to alter the relationship between personal liquidity and goods. It is a situation in America which is edging towards a crack-up boom. A crack-up boom occurs when the public as a cohort attempts to reduce the overall level of its currency and deposits in favour of goods towards a final point of rejecting the currency entirely. So far, economic history has recorded only one version, which is when after a period of accelerating debasement of a fiat currency the public finally wakes up to the certainty that a currency is becoming worthless and all hope that it might somehow survive as a medium of exchange must be abandoned. To this, perhaps we can add another: the consequences of a collapse of the world’s major monetary institutions in unison. How excess liquidity is likely to play out We have established beyond reasonable doubt that the US economy is awash with personal liquidity. And if one man disposes of his liquidity to another in a transaction the currency and bank deposit still exists. But aggregate personal liquidity can be reduced by the contraction of bank credit. As interest rates rise, thereby exposing malinvestments, the banks will be quick to protect themselves by withdrawing credit. As originally described by Irving Fisher, a contraction of bank credit risks triggering a self-feeding liquidation of loan collateral. Initially, we can expect central banks to counter this contraction by redoubling efforts to suppress bond yields, reinstitute more aggressive QE, and standing ready to bail out banks. These are all measures which are in the central banker’s instruction manual. But the conditions leading to a crack-up boom appear to be already developing despite the increasing likelihood of contracting bank credit. The deteriorating outlook for bank credit and the impact on highly leveraged banks, particularly in Japan and the Eurozone, is likely to accelerate the flight out of bank deposits to — where? Regulators have deliberately reduced access to currency cash so a bank depositor can only dispose of larger sums by transferring them to someone else. Before an initial rise in interest rates began to undermine financial asset values, a transfer of a bank deposit to a seller of a financial asset was a viable alternative. That is now an increasingly unattractive option due to the changed interest rate environment. Consequently, the principal alternative to holding bank deposits is to acquire physical assets and consumer items for future use. But even that assumes an overall stability in the public’s collective willingness to hold bank deposits, which without a significant rise in interest rates is unlikely to be the case. The reluctance of a potential seller to increase his bank deposits is already being reflected in prices for big ticket items, such as motor cars, residential property, fine and not-so-fine art, and an increasing selection of second-hand goods. This is not an environment that will respond positively to yet more currency debasement and interest rate suppression as the monetary authorities struggle to maintain control over markets. The global financial bubble is already beginning to implode, and the central banks which have accumulated large portfolios through quantitative easing are descending into negative equity. Only this week, the US Fed announced that it has unrealised portfolio losses of $330bn against equity of only $50bn. The Fed can cover this discrepancy if it is permitted by the US Treasury to revalue its gold note to current market prices – but further rises in bond yields will rapidly wipe even that out. Other central banks do not have this leeway, and in the cases of the ECB and the Bank of Japan, they are invested in considerably longer average bond maturities, which means that as interest rates rise their unrealised losses will be magnified. So, the major central banks are insolvent or close to it and will themselves have to be recapitalised. At the same time, they will be required to backstop a rapidly deteriorating economic situation. And being run by executives whose economic advisers do not understand both economics nor money itself, it all amounts to a recipe for a final cock-up crack-up boom as economic actors seek to protect themselves. As the situation unfolds and economic actors become aware of the true inadequacies of bureaucratic group-thinking central bankers, the descent into the ultimate collapse of fiat currencies could be swift. It is now the only way in which all that excess faux liquidity can be expunged. Tyler Durden Sat, 06/04/2022 - 13:30.....»»

Category: worldSource: nytJun 4th, 2022

Hedges: No Way Out But War

Hedges: No Way Out But War Authored by Chris Hedges via ScheerPost.com, (emphasis ours) Permanent war has cannibalized the country. It has created a social, political, and economic morass. Each new military debacle is another nail in the coffin of Pax Americana... Original Illustration by Mr. Fish — “No Guts No Glory” The United States, as the near unanimous vote to provide nearly $40 billion in aid to Ukraine illustrates, is trapped in the death spiral of unchecked militarism. No high speed trains. No universal health care. No viable Covid relief program. No respite from 8.3 percent inflation. No infrastructure programs to repair decaying roads and bridges, which require $41.8 billion to fix the 43,586 structurally deficient bridges, on average 68 years old. No forgiveness of $1.7 trillion in student debt. No addressing income inequality. No program to feed the 17 million children who go to bed each night hungry. No rational gun control or curbing of the epidemic of nihilistic violence and mass shootings. No help for the 100,000 Americans who die each year of drug overdoses. No minimum wage of $15 an hour to counter 44 years of wage stagnation. No respite from gas prices that are projected to hit $6 a gallon. The permanent war economy, implanted since the end of World War II, has destroyed the private economy, bankrupted the nation, and squandered trillions of dollars of taxpayer money. The monopolization of capital by the military has driven the US debt to $30 trillion, $ 6 trillion more than the US GDP of $ 24 trillion. Servicing this debt costs $300 billion a year. We spent more on the military, $ 813 billion for fiscal year 2023, than the next nine countries, including China and Russia, combined. We are paying a heavy social, political, and economic cost for our militarism. Washington watches passively as the U.S. rots, morally, politically, economically, and physically, while China, Russia, Saudi Arabia, India, and other countries extract themselves from the tyranny of the U.S. dollar and the international Society for Worldwide Interbank Financial Telecommunication (SWIFT), a messaging network banks and other financial institutions use to send and receive information, such as money transfer instructions. Once the U.S. dollar is no longer the world’s reserve currency, once there is an alternative to SWIFT, it will precipitate an internal economic collapse. It will force the immediate contraction of the U.S. empire shuttering most of its nearly 800 overseas military installations. It will signal the death of Pax Americana. Democrat or Republican. It does not matter. War is the raison d’état of the state. Extravagant military expenditures are justified in the name of “national security.” The nearly $40 billion allocated for Ukraine, most of it going into the hands of weapons manufacturers such as Raytheon Technologies, General Dynamics, Northrop Grumman, BAE Systems, Lockheed Martin, and Boeing, is only the beginning. Military strategists, who say the war will be long and protracted, are talking about infusions of $4 or $5 billion in military aid a month to Ukraine. We face existential threats. But these do not count. The proposed budget for the Centers for Disease Control and Prevention (CDC) in fiscal year 2023 is $10.675 billion. The proposed budget for the Environmental Protection Agency (EPA) is $11.881 billion. Ukraine alone gets more than double that amount. Pandemics and the climate emergency are afterthoughts. War is all that matters. This is a recipe for collective suicide. There were three restraints to the avarice and bloodlust of the permanent war economy that no longer exist. The first was the old liberal wing of the Democratic Party, led by politicians such as Senator George McGovern, Senator Eugene McCarthy, and Senator J. William Fulbright, who wrote The Pentagon Propaganda Machine. The self-identified progressives, a pitiful minority, in Congress today, from Barbara Lee, who was the single vote in the House and the Senate opposing a broad, open-ended authorization allowing the president to wage war in Afghanistan or anywhere else, to Ilhan Omar now dutifully line up to fund the latest proxy war. The second restraint was an independent media and academia, including journalists such as I.F Stone and Neil Sheehan along with scholars such as Seymour Melman, author of The Permanent War Economy and Pentagon Capitalism: The Political Economy of War.  Third, and perhaps most important, was an organized anti-war movement, led by religious leaders such as Dorothy Day, Martin Luther King Jr. and Phil and Dan Berrigan as well as groups such as Students for a Democratic Society (SDS). They understood that unchecked militarism was a fatal disease. None of these opposition forces, which did not reverse the permanent war economy but curbed its excesses, now exist. The two ruling parties have been bought by corporations, especially military contractors. The press is anemic and obsequious to the war industry. Propagandists for permanent war, largely from right-wing think tanks lavishly funded by the war industry, along with former military and intelligence officials, are exclusively quoted or interviewed as military experts. NBC’s “Meet the Press” aired a segment May 13 where officials from Center for a New American Security (CNAS) simulated what a war with China over Taiwan might look like. The co-founder of CNAS, Michèle Flournoy, who appeared in the “Meet the Press” war games segment and was considered by Biden to run the Pentagon, wrote in 2020 in Foreign Affairs that the U.S. needs to develop “the capability to credibly threaten to sink all of China’s military vessels, submarines and merchant ships in the South China Sea within 72 hours.”  The handful of anti-militarists and critics of empire from the left, such as Noam Chomsky, and the right, such as Ron Paul, have been declared persona non grata by a compliant media. The liberal class has retreated into boutique activism where issues of class, capitalism and militarism are jettisoned for “cancel culture,” multiculturalism and identity politics. Liberals are cheerleading the war in Ukraine. At least the inception of the war with Iraq saw them join significant street protests. Ukraine is embraced as the latest crusade for freedom and democracy against the new Hitler. There is little hope, I fear, of rolling back or restraining the disasters being orchestrated on a national and global level.  The neoconservatives and liberal interventionists chant in unison for war. Biden has appointed these war mongers, whose attitude to nuclear war is terrifyingly cavalier, to run the Pentagon, the National Security Council, and the State Department. Since all we do is war, all proposed solutions are military. This military adventurism accelerates the decline, as the defeat in Vietnam and the squandering of $8 trillion in the futile wars in the Middle East illustrate. War and sanctions, it is believed, will cripple Russia, rich in gas and natural resources. War, or the threat of war, will curb the growing economic and military clout of China. These are demented and dangerous fantasies, perpetrated by a ruling class that has severed itself from reality. No longer able to salvage their own society and economy, they seek to destroy those of their global competitors, especially Russia and China. Once the militarists cripple Russia, the plan goes, they will focus military aggression on the Indo-Pacific, dominating what Hillary Clinton as secretary of state, referring to the Pacific, called “the American Sea.”  You cannot talk about war without talking about markets. The U.S., whose growth rate has fallen to below 2 percent, while China’s growth rate is 8.1 percent, has turned to military aggression to bolster its sagging economy. If the U.S. can sever Russian gas supplies to Europe, it will force Europeans to buy from the United States. U.S. firms, at the same time, would be happy to replace the Chinese Communist Party, even if they must do it through the threat of war, to open unfettered access to Chinese markets. War, if it did break out with China, would devastate the Chinese, American, and global economies, destroying free trade between countries as in World War I. But that doesn’t mean it won’t happen. Washington is desperately trying to build military and economic alliances to ward off a rising China, whose economy is expected by 2028 to overtake that of the United States, according to the UK’s Centre for Economics and Business Research (CEBR). The White House has said Biden’s current visit to Asia is about sending a “powerful message” to Beijing and others about what the world could look like if democracies “stand together to shape the rules of the road.” The Biden administration has invited South Korea and Japan to attend the NATO summit in Madrid. But fewer and fewer nations, even among European allies, are willing to be dominated by the United States. Washington’s veneer of democracy and supposed respect for human rights and civil liberties is so badly tarnished as to be irrecoverable. Its economic decline, with China’s manufacturing 70 percent higher than that of the U.S., is irreversible. War is a desperate Hail Mary, one employed by dying empires throughout history with catastrophic consequences. “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable,” Thucydides noted in the History of the Peloponnesian War.  A key component to the sustenance of the permanent war state was the creation of the All-Volunteer Force. Without conscripts, the burden of fighting wars falls to the poor, the working class, and military families. This All-Volunteer Force allows the children of the middle class, who led the Vietnam anti-war movement, to avoid service. It protects the military from internal revolts, carried out by troops during the Vietnam War, which jeopardized the cohesion of the armed forces. The All-Volunteer Force, by limiting the pool of available troops, also makes the global ambitions of the militarists impossible. Desperate to maintain or increase troop levels in Iraq and Afghanistan, the military instituted the stop-loss policy that arbitrarily extended active-duty contracts. Its slang term was the backdoor draft. The effort to bolster the number of troops by hiring private military contractors, as well, had a negligible effect. Increased troop levels would not have won the wars in Iraq and Afghanistan but the tiny percentage of those willing to serve in the military (only 7 percent of the U.S. population are veterans) is an unacknowledged Achilles heel for the militarists. “As a consequence, the problem of too much war and too few soldiers eludes serious scrutiny,” writes historian and retired Army Colonel Andrew Bacevich in After the Apocalypse: America’s Role in a World Transformed. “Expectations of technology bridging that gap provide an excuse to avoid asking the most fundamental questions: Does the United States possess the military wherewithal to oblige adversaries to endorse its claim of being history’s indispensable nation? And if the answer is no, as the post-9/11 wars in Afghanistan and Iraq suggest, wouldn’t it make sense for Washington to temper its ambitions accordingly?” This question, as Bacevich points out, is “anathema.” The military strategists work from the supposition that the coming wars won’t look anything like past wars. They invest in imaginary theories of future wars that ignore the lessons of the past, ensuring more fiascos.  The political class is as self-deluded as the generals. It refuses to accept the emergence of a multi-polar world and the palpable decline of American power. It speaks in the outdated language of American exceptionalism and triumphalism, believing it has the right to impose its will as the leader of the “free world.” In his 1992 Defense Planning Guidance memorandum, U.S. Under Secretary of Defense Paul Wolfowitz argued that the U.S. must ensure no rival superpower again arises. The U.S. should project its military strength to dominate a unipolar world in perpetuity. On February 19, 1998, on NBC’s “Today Show”, Secretary of State Madeleine Albright gave the Democratic version of this doctrine of unipolarity. “If we have to use force it is because we are Americans; we are the indispensable nation,” she said. “We stand tall, and we see further than other countries into the future.” This demented vision of unrivaled U.S. global supremacy, not to mention unrivaled goodness and virtue, blinds the establishment Republicans and Democrats. The military strikes they casually used to assert the doctrine of unipolarity, especially in the Middle East, swiftly spawned jihadist terror and prolonged warfare. None of them saw it coming until the hijacked jets slammed into the World Trade Center twin towers. That they cling to this absurd hallucination is the triumph of hope over experience. There is a deep loathing among the public for these elitist Ivy League architects of American imperialism. Imperialism was tolerated when it was able to project power abroad and produce rising living standards at home. It was tolerated when it restrained itself to covert interventions in countries such as Iran, Guatemala, and Indonesia. It went off the rails in Vietnam. The military defeats that followed accompanied a steady decline in living standards, wage stagnation, a crumbling infrastructure and eventually a series of economic policies and trade deals, orchestrated by the same ruling class, which deindustrialized and impoverished the country. The establishment oligarchs, now united in the Democratic Party, distrust Donald Trump. He commits the heresy of questioning the sanctity of the American empire. Trump derided the invasion of Iraq as a “big, fat mistake.” He promised “to keep us out of endless war.” Trump was repeatedly questioned about his relationship with Vladimir Putin. Putin was “a killer,” one interviewer told him. “There are a lot of killers,” Trump retorted. “You think our country’s so innocent?” Trump dared to speak a truth that was to be forever unspoken, the militarists had sold out the American people. Noam Chomsky took some heat for pointing out, correctly, that Trump is the “one statesman” who has laid out a “sensible” proposition to resolve the Russia-Ukraine crisis. The proposed solution included “facilitating negotiations instead of undermining them and moving toward establishing some kind of accommodation in Europe…in which there are no military alliances but just mutual accommodation.” Trump is too unfocused and mercurial to offer serious policy solutions. He did set a timetable to withdraw from Afghanistan, but he also ratcheted up the economic war against Venezuela and reinstituted crushing sanctions against Cuba and Iran, which the Obama administration had ended. He increased the military budget. He apparently flirted with carrying out a missile strike on Mexico to “destroy the drug labs.” But he acknowledges a distaste for imperial mismanagement that resonates with the public, one that has every right to loath the smug mandarins that plunge us into one war after another. Trump lies like he breathes. But so do they. The 57 Republicans who refused to support the $40 billion aid package to Ukraine, along with many of the 19 bills that included an earlier $13.6 billion in aid for Ukraine, come out of the kooky conspiratorial world of Trump. They, like Trump, repeat this heresy. They too are attacked and censored. But the longer Biden and the ruling class continue to pour resources into war at our expense, the more these proto fascists, already set to wipe out Democratic gains in the House and the Senate this fall, will be ascendant. Marjorie Taylor Greene, during the debate on the aid package to Ukraine, which most members were not given time to closely examine, said: “$40 billion dollars but there’s no baby formula for American mothers and babies.” “An unknown amount of money to the CIA and Ukraine supplemental bill but there’s no formula for American babies,” she added. “Stop funding regime change and money laundering scams. A US politician covers up their crimes in countries like Ukraine.” Democrat Jamie Raskin immediately attacked Greene for parroting the propaganda of Russian president Vladimir Putin. Greene, like Trump, spoke a truth that resonates with a beleaguered public. The opposition to permanent war should have come from the tiny progressive wing of the Democratic Party, which unfortunately sold out to the craven Democratic Party leadership to save their political careers. Greene is demented, but Raskin and the Democrats peddle their own brand of lunacy. We are going to pay a very steep price for this burlesque. *  *  * The walls are closing in, with startling rapidity, on independent journalism, with the elites, including the Democratic Party elites, clamoring for more and more censorship. Please, if you can, sign up at chrishedges.substack.com so I can continue to post my now weekly Monday column on ScheerPost and produce my weekly television show, The Chris Hedges Report. Tyler Durden Wed, 05/25/2022 - 19:00.....»»

Category: personnelSource: nytMay 25th, 2022

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms...

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms... After months of endless jawboning and almost no action, overnight China finally cut its main mortgage interest rate by the most on record since the rate was introduced in 2019, as it tries to reduce the economic impact of Covid lockdowns and a property sector slowdown. The five-year loan prime rate was lowered from 4.6% to 4.45% on Friday (even as the 1 Year LPR was unchanged at 3.70%) . The reduction in the rate, which is set by a committee of banks and published by the People’s Bank of China, will directly reduce the borrowing costs on outstanding mortgages across the country (the move wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday). The rate cut was long overdue for China's property market which has experienced 8 straight months of home-price reductions with developers under extreme pressure. There was more bad news for China's embattled tech sector as Canada banned Huawei Technologies and ZTE equipment from use in its 5G network. The good news is that China's easing helped push Asian stocks higher, while European markets and US stock index futures also rose on Friday as buyers returned after a selloff fueled by recession fears saw the underlying S&P 500 lose more than $1 trillion in market value this week. Contracts on the S&P 500 advanced 1.1% as of 7:15a.m. in New York suggesting the index may be able to avoid entering a bear market (which would be triggered by spoos sliding below 3,855) at least for now, although today's $1.9 trillion Option Expiration will likely lead to substantial volatility, potentially to the downside.  Even with a solid jump today, should it not reverse as most ramps in recent days, the index - which is down almost 19% from its January record - is on track for a seventh week of losses, the longest such streak since March 2001. Futures on the Nasdaq 100 and Dow Jones indexes also gained. 10Y TSY yields rebounded from yesterday's tumble while the dollar was modestly lower. Gold and bitcoin were flat. In premarket trading, shares of gigacap tech giants rose, poised to recover some of the losses they incurred this week. Nasdaq 100 futures advanced 1.7%. The tech heavy benchmark has wiped out about $1.3 trillion in market value this month. Apple (AAPL US) is up 1.3% in premarket trading on Friday, Tesla (TSLA US) +2.6%.Palo Alto Networks jumped after topping estimates. Continuing the retail rout, Ross Stores cratered after the discount retailer cut its full-year outlook and first quarter results fell short of expectations. Here are some other notable premarket movers: Chinese stocks in US look set to extend this week’s gains on Friday after Chinese banks cut the five-year loan prime rate by a record amount, an effort to boost mortgage and loan demand in an economy hampered by Covid lockdowns. Alibaba (BABA US) +2.6%, Baidu (BIDU US) +1.1%, JD.com (JD US) +2.6%. Palo Alto Networks (PANW US) rises 11% in premarket trading on Friday after forecasting adjusted earnings per share for the fourth quarter that exceeded the average of analysts’ estimates. Applied Materials (AMAT US) falls 2.1% in premarket trading after its second-quarter results missed expectations as persistent chip shortages weighed on the outlook. However, Cowen analyst Krish Sankar notes that “while the macro/consumer data points have weakened, semicap demand is still healthy.” Ross Stores Inc. (ROST US) shares sank 28% in US premarket trade on Friday after the discount retailer cut its full-year outlook and 1Q results fell short of expectations, prompting analysts to slash their price targets. Foghorn Therapeutics (FHTX US) shares plunged 26% in postmarket trading after the company said the FDA has placed the phase 1 dose escalation study of FHD-286 in relapsed and/or refractory acute myelogenous leukemia and myelodysplastic syndrome on a partial clinical hold. Wix.com (WIX US) cut to equal-weight from overweight at Morgan Stanley as investors are unlikely to “give credit to a show-me story” in the current context which limits upside catalysts in the near term, according to note. Deckers Outdoor (DECK US) jumped 13% in US postmarket trading on Thursday after providing a year sales outlook range with a midpoint that beat the average consensus estimate. VF Corp’s (VFC US) reported mixed results, with analysts noting the positive performance of the company’s North Face brand, though revenues did miss estimates amid a tricky macro backdrop. The outdoor retailer’s shares rose 2.2% in US postmarket trading on Thursday. “The ‘risk-on’ trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China after the PBoC cut one of the key interest rates by a record amount,” said Pierre Veyret, a technical analyst at ActivTrades. “This will provide a fresh boost to the economy, helping small businesses and mitigate the negative impacts of lockdowns in the world’s second-largest economy.” Still, the broader market will have to fend off potential risks from options expiration, which is notorious for stirring up volatility. Traders will close old positions for an estimated $1.9 trillion of derivatives while rolling out new exposures on Friday. This time round, $460 billion of derivatives across single stocks is scheduled to expire, and $855 billion of S&P 500-linked contracts will expire according to Goldman. Rebounds in risk sentiment have tended to fizzle this year. Investors continue to grapple with concerns about an economic downturn, in part as the Federal Reserve hikes interest rates to quell price pressures. Global shares are on course for an historic seventh week of declines. “The risk-on trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China,” said Pierre Veyret, an analyst at ActivTrades. “This move significantly contrasts with the lingering inflation and recession risks in Western economies, where an increasing number of market operators and analysts are questioning the policies of central banks.” In Europe, the Stoxx Europe 600 index added 1.5%, erasing the week’s losses. The French CAC 40 lags, rising 0.9%. Autos, travel and miners are the strongest-performing sectors, rebounding after two days of declines. Basic resources outperformed as industrial metals rallied. Consumer products was the only sector in the red as Richemont slumped after the Swiss watch and jewelry maker reported operating profit for the full year that missed the average analyst estimate and its Chairman Johann Rupert said China is going to take an economic blow and warned the Chinese economy will suffer for longer than people think. The miss sent luxury stocks plunging: Richemont -11%, Swatch -3.8%, Hermes -3.2%, LVMH -1.9%, Kering -1.7%, Hugo Boss -1.7%, etc. These are the biggest European movers: Rockwool rises as much as 10% as the market continued to digest the company’s latest earnings report, which triggered a surge in the shares, with SocGen and BNP Paribas upgrading the stock. Valeo and other European auto stocks outperformed, rebounding after two days of losses. Citi says Valeo management confirmed that auto production troughed in April and activity is improving. Sinch gained as much as 5.4% after Berenberg said peer’s quarterly results confirmed the cloud communications company’s strong positioning in a fast-growing market. Lonza shares gain as much as 4.1% after the pharmaceutical ingredients maker was raised to outperform at RBC, with the broker bullish on the long-term demand dynamics for the firm. THG shares surge as much as 32% as British entrepreneur Nick Candy considers an offer to acquire the UK online retailer, while the company separately announced it rejected a rival bid. Maersk shares rise as much as 4.6%, snapping two days of declines, as global container rates advance according to Fearnley Securities which says 2H “looks increasingly promising.” PostNL shares jump as much as 8.2% after the announcement that Vesa will acquire sole control of the Dutch postal operator. Analysts say reaction in the shares is overdone. Dermapharm shares gain as much as 6.1%, the most since March 22, with Stifel saying the pharmaceuticals maker is “significantly undervalued” and have solid growth drivers. Richemont shares tumble as much as 14%, the most in more than two years, after the luxury retailer’s FY Ebit was a “clear miss,” with cost increases in operating expenses. Luxury peers were pulled lower alongside Richemont after the company’s disappointing earnings report, in which its CEO also flagged the Chinese market will lag for longer than people assume. Instone Real Estate shares drop as much as 12% as the stock is downgraded to hold from buy at Deutsche Bank, with the broker cutting its earnings estimates for the property developer Earlier in the session, Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood. ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Japanese stocks regain footing in the wake of Thursday’s selloff, after Chinese banks cut a key interest rate for long-term loans by a record amount. The Topix rose 0.9% to 1,877.37 at the 3 p.m. close in Tokyo, while the Nikkei 225 advanced 1.3% to 26,739.03. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 2.1%. Out of 2,171 shares in the index, 1,511 rose and 567 fell, while 93 were unchanged. In Australia, the S&P/ASX 200 index rose 1.2% to close at 7,145.60 on the eve of Australia’s national election. Technology shares and miners led sector gains. Chalice Mining climbed after getting approvals for further exploration drilling at the Hartog-Dampier targets within its Julimar project. Novonix advanced with other lithium-related shares after IGO announced its first and consistent production of battery grade lithium hydroxide from Kwinana. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,267.39 India’s benchmark stocks index rebounded from a 10-month low and completed its first weekly gain in six, boosted by an advance in Reliance Industries.  The S&P BSE Sensex jumped 2.9% to 54,326.39 in Mumbai. The NSE Nifty 50 Index also rose by a similar magnitude on Friday. Stocks across Asia advanced after Chinese banks lowered a key interest rates for long-term loans.   Reliance Industries climbed 5.8%, the largest advance since Nov. 25, and gave the biggest boost to the Sensex, which had all 30 member stocks trading higher. All 19 sector indexes compiled by BSE Ltd. advanced, led by a gauge of realty stocks.  “Stocks in Asia and US futures pushed higher today amid a bout of relative calm in markets, though worries about a darkening economic outlook and China’s Covid struggles could yet stoke more volatility,” according to a note from SMC Global Securities Ltd.  In earnings, of the 36 Nifty 50 firms that have announced results so far, 21 have either met or exceeded analyst estimates, while 15 have missed forecasts. In FX, the Bloomberg Dollar Spot Index inched higher as the greenback traded mixed against its Group-of-10 peers. Treasuries fell modestly, with yields rising 1-2bps. The euro weakened after failing to hold on to yesterday’s gains that pushed it above $1.06 for the first time in more than two weeks. Inversion returns for the term structures in the yen and the pound, yet for the euro it’s all about the next meetings by the European Central Bank and the Federal Reserve. The pound rose to a session high at the London open, coinciding with data showing UK retail sales rose more than forecast in April. Retail sales was up 1.4% m/m in April, vs est. -0.3%. Other showed a plunge in consumer confidence to the lowest in at least 48 years. The Swiss franc halted a three-day advance that had taken it to the strongest level against the greenback this month. Australia’s sovereign bonds held opening gains before a federal election Saturday amid fears of a hung parliament, which could stifle infrastructure spending. The Australian and New Zealand dollar reversed earlier losses. The offshore yuan and South Korean won paced gains in emerging Asian currencies as a rally in regional equities bolstered risk appetite. In rates, Treasuries were slightly cheaper as S&P 500 futures advanced. Yields were higher by 2bp-3bp across the Treasuries curve with 10- year around 2.865%, outperforming bunds and gilts by 1.7bp and 3.5bp on the day; curves spreads remain within 1bp of Thursday’s closing levels. Bunds and Italian bonds fell, underperforming Treasuries, as haven trades were unwound. US session has no Fed speakers or economic data slated. UK gilts 2s10s resume bear-flattening, underperforming Treasuries, after BOE’s Pill said tightening has more to run. Gilts 10y yields regain 1.90%. Bund yield curve-bear steepens. long end trades heavy with 30y yield ~6bps cheaper. Peripheral spreads widen to core with 5y Italy underperforming. Semi-core spreads tighten a touch. In commodities, WTI trades within Thursday’s range, falling 0.5% to around $111. Most base metals trade in the green; LME lead rises 2.6%, outperforming peers. LME nickel lags, dropping 1.5%. Spot gold is little changed at $1,844/oz. KEY HEADLINES: Looking at the day ahead, there is no macro news in the US. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Market Snapshot S&P 500 futures up 1.1% to 3,940.00 STOXX Europe 600 up 1.2% to 433.00 MXAP up 1.6% to 164.68 MXAPJ up 2.1% to 539.85 Nikkei up 1.3% to 26,739.03 Topix up 0.9% to 1,877.37 Hang Seng Index up 3.0% to 20,717.24 Shanghai Composite up 1.6% to 3,146.57 Sensex up 2.5% to 54,115.12 Australia S&P/ASX 200 up 1.1% to 7,145.64 Kospi up 1.8% to 2,639.29 German 10Y yield little changed at 0.97% Euro down 0.2% to $1.0567 Gold spot up 0.2% to $1,845.64 U.S. Dollar Index up 0.25% to 102.98 Brent Futures down 0.4% to $111.55/bbl Top Overnight News from Bloomberg BOE Chief Economist Huw Pill said monetary tightening has further to run in the UK because the balance of risks is tilted toward inflation surprising on the upside ECB Governing Council Member Visco says a June hike is ‘certainly’ out of the question while July is ‘perhaps’ the time to start rate hikes China’s plans to bolster growth as Covid outbreaks and lockdowns crush activity will see a whopping $5.3 trillion pumped into its economy this year Chinese banks cut a key interest rate for long- term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand caused by a property slump and Covid lockdowns China’s almost-trillion dollar hedge fund industry risks worsening the turmoil in its stock market as deepening portfolio losses trigger forced selling by some managers. About 2,350 stock-related hedge funds last month dropped below a threshold that typically activates clauses requiring them to slash exposures, with many headed toward a level that mandates liquidation Investors fled every major asset class in the past week, with US equities and Treasuries a rare exception to massive redemptions Ukraine’s central bank is considering a return to regular monetary policy decisions as soon as next month in a sign the country is getting its financial system back on its feet after a shock from Russia’s invasion The Group of Seven industrialized nations will agree on more than 18 billion euros ($19 billion) in aid for Ukraine to guarantee the short-term finances of the government in Kyiv, according to German Finance Minister Christian Lindner The best may already be over for the almighty dollar as growing fears of a US recession bring down Treasury yields A more detailed look at global markets courtesy of Newsquqawk Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood.  ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Nikkei 225 was underpinned following the BoJ’s ETF purchases yesterday and despite multi-year high inflation. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Top Asian News Chinese Premier Li vows efforts to aid the resumption of production, via Xinhua; will continue to build itself into a large global market and a hot spot for foreign investment, via Reuters. US and Japanese leaders are to urge China to reduce its nuclear arsenal, according to Yomiuri. It was also reported that Japanese PM Kishida is expected to announce a defence budget increase during the summit with US President Biden, according to TV Asahi. Offshore Yuan Halts Selloff With Biggest Weekly Gain Since 2017 Hong Kong Dollar Traders Brace for Rate Spike Amid Intervention Shanghai Factory Output Fell 20 Times Faster Than Rest of China Japan’s Inflation Tops 2%, Complicating BOJ Stimulus Message European indices have started the week's last trading day positively and have extended on gains in early trade. Swiss SMI (+0.5%) sees its upside capped by losses in Richemont which provided a downbeat China outlook. European sectors are almost wholly in the green with a clear pro-cyclical bias/anti-defensive bias - Healthcare, Personal & Consumer Goods, Telecoms, Food & Beverages all reside at the bottom of the chart, whilst Autos & Parts, Travel & Leisure and Retail lead the charge on the upside. US equity futures have also been trending higher since the reopening of futures trading overnight Top European News Holcim, HeidelbergCement Said to Compete for Sika US Unit Prosus Looking to Sell $6 Billion Russian Ads Business Avito European Autos Outperform in Rebound, Driven by Valeo, Faurecia Volkswagen Pitted Against Organic Farmer in Climate Court Clash FX DXY bound tightly to 103.000, but only really firm relative to Yen on renewed risk appetite. Yuan back to early May peaks after PBoC easing of 5 year LPR boosts risk sentiment - Usd/Cny and Usd/Cnh both sub-6.7000. Kiwi outperforms ahead of anticipated 50 bp RBNZ hike next week and with tailwind from Aussie cross pre-close call election result. Euro and Pound capped by resistance at round number levels irrespective of hawkish ECB commentary and surprisingly strong UK consumption data. Lira lurching after Turkish President Erdogan rejection of Swedish and Finnish NATO entry bids. Japanese PM Kishida says rapid FX moves are undesirable, via Nikkei interview; keeping close ties with overseas currency authorities, via Nikkei. Fixed Income Debt futures reverse course amidst pre-weekend risk revival, partly prompted by PBoC LPR cut. Bunds hovering above 153.00, Gilts sub-119.50 and T-note just over 119-16. UK debt also taking on board surprisingly strong retail sales metrics and EZ bonds acknowledging more hawkish ECB rhetoric. Commodities WTI and Brent July futures consolidate in early European trade in what has been another volatile week for the crude complex. Spot gold has been moving in tandem with the Buck and rose back above its 200 DMA Base metals are mostly firmer, with LME copper re-eyeing USD 9,500/t to the upside as the red metal is poised for its first weekly gain in seven weeks Russia's Gazprom continues gas shipments to Europe via Ukraine, with Friday volume at 62.4mln cubic metres (prev. 63.3mbm) Central Banks BoE Chief Economist Pill says inflation is the largest challenge faced by the MPC over the past 25 years. The MPC sees an upside skew in the risks around the inflation baseline in the latter part of the forecast period. Pill said further work needs to be done. "In my view, it would be preferable to have any such gilt sales running ‘in the background’, rather than being responsive to month-to-month data news.", via the BoE. ECB's Kazaks hopes the first ECB hike will happen in July, according to Bloomberg. ECB's Muller says focus needs to be on fighting high inflation, according to Bloomberg. ECB's Visco says the ECB can move out of negative rate territory; a June hike is "certainly" out of the question but July is perhaps the time to start Chinese Loan Prime Rate 1Y (May) 3.70% vs. Exp. 3.65% (Prev. 3.70%); Chinese Loan Prime Rate 5Y (May) 4.45% vs. Exp. 4.60% (Prev. 4.60%) Fed's Kashkari (2023 voter) said they are removing accommodation even faster than they added it at the start of COVID and have done quite a bit to remove support for the economy through forward guidance. Kashkari stated that he does not know how high rates need to go to bring inflation down and does not know the odds of pulling off a soft-landing, while he is seeing some evidence they are in a longer-term high inflation regime and if so, the Fed may need to be more aggressive, according to Reuters US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap The good thing about having all these injuries in recent years is that when it comes down to any father's football matches or sport day races I now know that no amount of competitive juices make getting involved a good idea. However my wife has not had to learn her lesson yet and tomorrow plays her first netball match for 37 years in a parents vs schoolgirls match. The mums had a practise session on Tuesday and within 3 minutes one of them had snapped their ACL. I'll be nervously watching from the sidelines. Markets were also very nervous yesterday after a torrid day for risk sentiment on Tuesday. Although equities fell again yesterday it was all fairly orderly. This morning Asia is bouncing though on fresh China stimulus, something we discussed in yesterday's CoTD here. More on that below but working through things chronologically, earlier the Stoxx 600 closed -1.37% lower, having missed a large portion of the previous day’s US selloff, but generally continues to out-perform. US equities bounced around, with the S&P 500 staging a recovery from near intraday lows after the European close, moving between red and green all day (perhaps today's option expiry is creating some additional vol) before closing down -0.58%. This sent the index to a fresh one year low and puts the week to date loss at -3.06%, having declined -18.68% since its January peak. Barring a major reversal today, the index is now on track to close lower for a 7th consecutive week for the first time since 2001. In terms of the sectoral breakdown, it was another broad-based decline yesterday, but consumer discretionary stocks (+0.13%) recovered somewhat following their significant -6.60% decline the previous day. Consumer staples, meanwhile, continued their poor run, falling -1.98%, while tech (-1.07%) was not far behind. Those losses occurred against the backdrop of a fresh round of US data releases that came in beneath expectations, which also helped the dollar index weaken -0.93% to mark its worst daily performance since March. First, there were the weekly initial jobless claims for the week through May 14, which is one of the timeliest indicators we get on the state of the economy. That rose to 218k (vs. 200k) expected, which is its highest level since January. Then there was the Philadelphia Fed’s manufacturing business outlook survey for May, which fell to a two-year low of 2.6 (vs. 15.0 expected). And finally, the number of existing home sales in April fell to its lowest level since June 2020, coming in at an annualised rate of 5.61m (vs. 5.64m expected). The broader risk-off move that created meant that sovereign bonds rallied on both sides of the Atlantic. Yields on 10yr Treasuries were down -4.7bps to 2.84%, which follows their -10.2bps decline in the previous session. We didn’t get much in the way of Fed speakers yesterday, but Kansas City Fed President George nodded to recent equity market volatility, saying that it was “not surprising”, and that whilst policy wasn’t aimed at equity markets, “it is one of the avenues through which tighter financial conditions will emerge”. So no sign yet of the Fed being unhappy about tighter financial conditions so far, and markets are continuing to fully price in two further 50bp moves from the Fed in June and July. Nobody said getting inflation back to target from such lofty levels would be easy. So if you’re looking for a Fed put, it may take a while. Later on, Minneapolis Fed President Kashkari drove that point home, saying he was not sure how high rates ultimately needed to go, but said the Fed must ensure inflation does not get embedded in expectations. Over in Europe debt moves were more significant yesterday, having not taken part in the late US rally on Wednesday. Yiields on 10yr bunds (-8.0bps), OATs (-7.4bps) and BTPs (-6.2bps) all saw a reasonable decline on the day. Over in credit as well, iTraxx Crossover widened +10.2bps to 478bps, which surpasses its recent high earlier this month and takes it to levels not seen since May 2020. We also got the account from the April ECB meeting, although there wasn’t much there in the way of fresh headlines, with hawks believing that it was “important to act without undue delay in order to demonstrate the Governing Council’s determination to achieve price stability in the medium term.” That group also said that the monetary policy stance “was no longer consistent with the inflation outlook”. But then the doves also argued that moving policy “too aggressively could prove counterproductive” since monetary policy couldn’t tackle “the immediate causes of high inflation.” Asian equity markets are trading higher this morning after the People’s Bank of China (PBOC) lowered key interest rates amid the faltering economy. They cut the 5-year loan prime rate (LPR) – which is the reference rate for home mortgages for the second time this year from 4.6% to 4.45%, the largest cut on record, as Beijing seeks to revive the ailing housing sector to prop up the economy. Meanwhile, it left the 1-year LPR unchanged at 3.7%. Across the region, the Hang Seng (+1.83%) is leading gains in early trade with the Shanghai Composite (+1.11%) and CSI (+1.41%) also trading up. Elsewhere, the Nikkei (+1.08%) and Kospi (+1.75%) are trading in positive territory. Outside of Asia, equity futures in DMs indicate a positive start with contracts on the S&P 500 (+0.75%), NASDAQ 100 (+1.01%) and DAX (+1.13%) all notably higher. In other news, Japan’s national CPI rose +2.5% y/y in April, the highest for the headline rate since October 2014 and compared to the previous month’s +1.2% increase. Oil prices are lower with Brent futures -0.77% down to $111.18/bbl, as I type. To the day ahead now, and data releases include UK retail sales and German PPI for April, as well as the advance Euro Area consumer confidence reading for May. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Tyler Durden Fri, 05/20/2022 - 08:02.....»»

Category: smallbizSource: nytMay 20th, 2022

Mark Cuban supports Biden"s proposal to forgive $10,000 in student debt per borrower as long as "ridiculous tuition fees" are addressed alongside it: "We don"t want this being a perennial problem"

Cuban previously said canceling debt is "the worst thing you can do," but told Insider he now supports forgiving $10,000 and free community college. Mark Cuban on the set of "Shark Tank" season 13.ABC Entrepreneur Mark Cuban told Insider that he's in favor of Biden's proposal to cancel $10,000 in student debt per borrower.  That's a reversal from his previous position, saying cancellation bails out higher-ed institutions.  He said that making sure colleges and universities can't charge "ridiculous" fees is a more pressing problem.  Mark Cuban, one of the wealthiest people in America, is on board with student debt forgiveness. At least, partial student debt forgiveness, Cuban told Insider. In addition to saying that community colleges should be free, the billionaire entrepreneur, TV personality, and owner of the Dallas Mavericks came out in favor of President Joe Biden's proposal to cancel $10,000 in student debt per borrower. "We don't want this being a perennial problem," he said in an email. "It has to be fixed. As far as how much should be forgiven, I'm good with the Biden proposal." Pressure has been mounting over the past two years for Biden to cancel student debt, especially as midterms approach. His campaign pledge to cancel $10,000 is, to this day, the strongest commitment he's made toward relief. Over the years, Cuban has been consistent about his view that lowering student debt would improve the economy, although his position has always been that colleges and universities charging "ridiculous tuition fees" is his biggest concern. In fact, he's previously said that canceling student debt is "the worst thing you can do." "All it does is bail out the universities," he said in 2015. Even though Cuban's in favor of easing some of the $1.7 trillion-plus in cumulative student debt among Americans, he still says the exorbitant cost of higher education is a more important target. "How do we keep students from repeating the same mistakes?" he said. Biden recently said a decision on student-loan forgiveness will be made in the coming weeks, and while it's unclear what amount he will settle on, some reports have suggested he might target the relief to those making under $125,000 a year — a task Politico reported would be difficult for the Education Department to do on its own. And Cuban's concerns with soaring tuition are shared among other Democratic lawmakers pushing for debt relief. Michigan Rep. Andy Levin, the House original sponsor of free community college legislation, previously told Insider the student debt crisis will "absolutely be exacerbated" if free college does not come next. And Education Secretary for former President Barack Obama told Insider earlier this year that the lack of free community college is a policy failure Biden can correct."This is really a moment to correct a policy mistake of the last 40 years in terms of federal and state disinvestment, particularly from public higher education," King said.Read the original article on Business Insider.....»»

Category: worldSource: nytMay 18th, 2022

Obama, Biden Largely To Blame For $1.6 Trillion Student Debt Crisis: Author

Obama, Biden Largely To Blame For $1.6 Trillion Student Debt Crisis: Author By John Ransom of The Epoch Times As President Joe Biden considers some form of loan forgiveness for college borrowers, student loans in America have been a slow-boiling crisis for almost a decade now. U.S. President Joe Biden gives remarks before meeting with small business owners in the South Court Auditorium of the White House in Washington on April 28, 2022. One expert critic who has been following the crisis lays much of the blame for the $1.6 trillion loan debacle at the feet of two men at the very top of the U.S. government: former President Barrack Obama and Biden. “This is far worse than the Savings and Loan crisis, or the sub-prime auto crisis and even the subprime mortgage crisis,” Allen Collinge, author of the book “The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back,” told the Epoch Times. “These two guys are some of the people most responsible for permanently saddling so many Americans with debt for which they have no way out but dying,” Collinge added. Two factors have come together, said Collinge, to create what he calls the biggest loan crisis in U.S. history. The first was the removal of bankruptcy protections that people enjoy from all other debt in America. “Among all living, serving elected officials, Biden literally is most culpable for removing bankruptcy protections from these loans, which really is the core of this problem,” said Collinge, who runs an organization called Student Loan Justice, which is seeking cancellation of all student loan debt in return for the end of the federal student loan program. Serving as a member, and then eventually, as the chairman of the Senate Judiciary Committee, Biden was instrumental in removing bankruptcy protection from, at first, government-backed student loans, and then, from privately-made student loans. “Joe Biden bears a large amount of responsibility for passage of the bankruptcy bill,” Ed Boltz, president of the National Association of Consumer Bankruptcy Attorneys, told International Business Times in 2015. Then Came Obama Those pieces of legislation that denied students bankruptcy protection dove-tailed into the rapid expansion of student loans for which then-President Obama stumped in 2010 as he federalized the student loan program To get students to borrow more, Obama pulled out all the stops, as the Congressional Budget Office (CBO) claimed the move to federalization would save the country $60 billion. “This is great for the country,” Then-Education Secretary Arne Duncan told NPR in an interview at the time the measure was approved. “It’s one of these sort of miraculous, once-in-a-lifetime opportunities, and we could put $60 billion minimum there behind students simply by removing subsidies to banks and not going back to taxpayers for another dime,” Duncan added. Source: Congressional Budget Office, using data from the Department of Education’s National Student Loan Data System. Then the president sent out First Lady Michelle Obama as the face of an effort which the Obama White House called “Reaching the ‘North Star’ by 2020,” which encouraged everybody to go back to some sort of higher education institution and get another degree, financed of course, by the U.S. government. Students were encouraged to take out student loans that were termed by the White House “financial aid eligibility that can make college affordability a reality.” During the Obama years, student loans climbed from about $700 billion to nearly $1.4 trillion, edging out credit card debt by 2012. Prospective students were told to host their own “signing-day” party where they signed up with a college, university, or vocational school for higher education, just like college football players and basketball players do when they signed on with schools. The signing day came with its own 16-page instruction booklet from the White House that told students “an education is worth way more than just a higher paycheck—it’s the most valuable asset a person can ever have. It is something they will have their entire life.” One question that remained unanswered in those books, however, was how students would pay off their debt. But Obama’s efforts paid off as student debt rose from $12,434, per student debtor in 1992, according to the Pew Research Center, to the $40,904 that’s owed per student debtor today, according to EducationData.org. Increasingly, it looks like student loan debt is debt that will follow students their entire life; a debt that has turned that “asset” the White House told them to prize, into a millstone around students’ necks. And that $60 billion in savings that was forecasted by the CBO that then-Education Secretary Duncan was touting? It turns out that instead of saving the country $60 billion, it cost $400 billion, not including any loan forgiveness. “CBO miscalculated the cost of the Healthcare and Reconciliation Act [that federalized student loans] by $503 billion, before factoring in President Biden’s student loan bailouts. Congress may not have passed this bill had CBO appropriately scored it,” House Republicans wrote in a letter this week to CBO Director Philip Swagel, demanding to know how the CBO got the figures so wrong. The Epoch Times has reached out to the White House, CBO, and Obama for comment. The Obama-Biden Legacy Comes Due According to figures gathered by Collinge that he gleaned from the Department of Education (DOE), 63 percent of all money borrowed in student loans are from people over the age of 35, who on average owe $41,900 worth of debt. That compares to the under-35 crowd which has an average debt of $25,300. “The big growth in loans has been in graduate schools,” Jason Delisle, now a research fellow at the Urban Institute think tank, told PBS in 2017, sounding an early alarm bell. “Yet there’s just no heat on what are people getting for these degrees. On the undergraduate side, there are loan limits and concern around defaults and earnings. On the graduate school side, there’s none of that,” added Delisle. And graduate studies are big money makers for schools, often making the difference between being profitable and closing down, say some experts. Slate recently called Master’s degree programs “the biggest scam in higher education,” citing one expert who called schools’ Master’s programs “largely unregulated cash cows that help shore up their bottom line.” Even before the pandemic hit, the DOE said only one in four borrowers were paying down both principal and interest on loans. While it’s bad in every state, especially hard hit by student borrowing are the states of the Deep South. The worst-hit is Mississippi where the debt to income for student loans is nearly 1:1. According to Collinge, what makes this loan crisis different than, say, the Savings and Loan crisis of the 1980s or the subprime mortgage crisis of the 2000s is the unlimited collection powers of the federal government, the lack of any statute of limitations on the debt and the fact that the debtors have no recourse to bankruptcy protections that our Founders intended them to have. He cited one documented case where he shows a debtor who borrowed $26,000 as a student loan has paid $93,593.54 in interest payments and less than $1.00 of principal. As of today, the principal balance is still $132,174 for this 59-year-old woman facing retirement shortly. Screenshots showing the loan repayments and debt outstanding on a 59-year-old woman’s student loan. (Provided to The Epoch Times) “The harm caused by this predatory lending system created by Biden—and others—and exacerbated by Obama, is particularly acute for seniors, who are seeing their social security and disability income garnished, often despite having repaid far, far more than they originally borrowed,” said Collinge. This failure to disclose the actual terms upon which borrowers are taking out loans was a great concern to the federal government during the subprime mortgage crisis that saw the government take action against mortgage lenders who paid fines of over $234 billion for actions that are essentially fraudulent, with at least 59 bankers going to jail. But somehow, when the federal government started loaning the money to students, those same rules stopped applying. “If any other lending system did this, it would be criminal, people would be in handcuffs,” concluded Collinge. So as the argument rages in Congress about whether student loans should be forgiven, or go into collection, Collinge wants people to remember one simple thing: Stop listening to the people who actually caused the problem to begin with. Tyler Durden Thu, 05/05/2022 - 19:00.....»»

Category: blogSource: zerohedgeMay 5th, 2022

Futures Rebound From Two-Day Plunge As Yield And Oil Rise

Futures Rebound From Two-Day Plunge As Yield And Oil Rise U.S. index futures edged higher, along with European shares, after the sharpest two-day drop in almost a month, as investors digested Federal Reserve’s hawkish path and were jerked higher by a fleeting moment of Ukraine ceasefire hope when Emini futures initially spiked to session highs on the following Reuters headline: RUSSIAN FOREIGN MINISTER SAYS UKRAINE PRESENTED A NEW DRAFT AGREEMENT TO RUSSIA ON WEDNESDAY - IFX ... only to reverse the entire move two minutes later when the following headline hit: LAVROV: UKRAINE PROPOSALS ON CRIMEA, DONBAS UNACCEPTABLE: IFX Mini hiccup aside, S&P futures were about 0.1% higher at 4,481 while Nasdaq futures gained 0.5% to 14,574, signaling an end to a selloff in the underlying index that erased $850 billion in market value over two days.  Ten-year Treasury yields were flat around 2.61%, the dollar extended its rally to a sixth day, the longest streak in almost 10 months, and oil rebounded from yestereday's IEA reserve release-driven plunge. Markets are showing signs of recovery after a selloff brought on by hawkish Fed minutes in which the central bank laid out a long-awaited plan to shrink their balance sheet by about $95BN per month or more than $1 trillion a year while raising interest rates “expeditiously” to counter the hottest inflation in four decades. “The FOMC minutes gave the clarity that every investors was looking for,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “The US 2-10 year spread is back in the positive after having slipped below zero, but the recession threat is real, keeping the investor mood sour as the Fed pulls back support.” “The Fed delivered what most market watchers were looking for, with details around the pace and composition of the balance sheet runoff,” said Janus Henderson global bond PM Jason England. Along with recent hawkish comments from Fed officials, the minutes showed “the Fed has pivoted from a gradual approach to tightening monetary policy to now moving more rapidly toward a neutral stance,” he said. In premarket trading, HP shares were up 13% after Warren Buffett’s Berkshire Hathaway bought an 11% stake worth $4.2 billion in the laptop maker valued at more than $4.2 billion. SoFi shares declined 5.1% in premarket after the fintech firm gave new guidance as the U.S. government extended the pause on student-loan payments. Other notable premarket overs include: Levi Strauss & Co. (LEVI US) gains 5.5% in premarket trading after it said revenue during the most recent quarter increased 22% to $1.6 billion. Wells Fargo said comments about a strong first quarter and good momentum in March should help dispel investor concerns, at least in the near term. Wayfair (W US) falls 4.4% in premarket trading after Wells Fargo downgrades to underweight from equal weight in sector note turning more cautious on housing-impacted retailers. SoFi (SOFI US) drops 5.1% in premarket trading as Morgan Stanley cuts its 2022 Ebitda estimate by $42m to $100m after the fintech firm gave new guidance as the U.S. government extended the pause on student-loan payments. Sprinklr’s fourth- quarter results were a positive, though the most impressive point was the software company’s guidance, Barclays analysts led by Raimo Lenschow write in a note. The shares rose 4.7% in postmarket trading on Wednesday. Vapotherm (VAPO US) falls 23% in premarket trading after the respiratory-device company reported preliminary quarterly revenue that fell short of analysts’ estimates and withdrew its annual guidance. In Europe, the Stoxx 600 added 0.7%, boosted by a rally in shares of Atlantia SpA, the billionaire Benettons’ highway and airport group. Atlantia added 10% in Italian trading after a non-binding bid from Global Infrastructure Partners and Brookfield Asset Management Inc. European healthcare and chemical stocks outperformed, while energy and miners declined. IBEX outperformed, adding 1.5%, FTSE 100 lags, dropping 0.1%. Health care, chemicals and travel are the strongest performing sectors. The energy sector was in the red, dragging the U.K.’s benchmark FTSE 100 down, as Shell’s $4-$5BN hit from its withdrawal from Russia weighed on oil producers. The statement from the London-based giant shows that, despite a surge in oil and gas prices, Russia’s invasion of Ukraine has upended the supermajors’ plans and left them scrambling to adapt to historic shifts in energy markets. Here are the most notable European premarket movers: Atlantia shares rise as much as 12%, extending yesterday’s gains, after a Bloomberg report that the motorway and airport company could become the target of a bidding war. Electrolux advances as much as 5.8% after announcing a positive non- recurring item of $70.5m in 1Q. Euronav shares gain as much as 12% on news of a potential stock-for-stock combination with Frontline to create a tanker company with a market capitalization of more than $4.2b. Daetwyler shares jump as much as 6% after it announced the acquisition of U.S. electrical connector seals company QSR, with Baader saying the deal may benefit earnings from day one. 888 shares surge as much as 31% after the gambling company announced a share placement to pay for its now-cheaper acquisition of William Hill’s international assets, with analysts reacting positively. Verbio shares surge to a record high after Hauck & Aufhauser lifts its PT on the biodiesel manufacturer by almost 33% ahead of what the broker expects to be “another outstanding quarter.” European basic resources and energy shares decline, lagging all other sectors, as commodity prices start to pull back, with Anglo American, Rio Tinto and Glencore all posting declines. PageGroup and other staffing companies fall after Jefferies lowers EPS estimates across the sector and takes a “more risk-off approach” in note, downgrading PageGroup in the process. Countryside shares sank as the home developer forecast a decline in profit after conducting a review of its business following a dispute with an activist investor. TI Fluid Systems falls as much as 12% after Jefferies downgraded the automotive parts maker to hold from buy, saying conditions faced by the company are among the most difficult in its coverage. Earlier in the session, Asian stocks slid to a three-week low as traders feared a rapid rise in U.S. interest rates and aggressive scale-back of the Federal Reserve’s bond holdings could stymie growth and hurt earnings. The MSCI Asia Pacific Index lost as much as 1.4% on Thursday, with tech shares leading the losses in many countries, after minutes of the Fed’s March meeting showed plans to shrink its balance sheet by more than $1 trillion a year. The fall came after the Asian benchmark slumped 1.5% on Wednesday following similarly hawkish comments from Fed Governor Lael Brainard. Worries that hawkish policy tightening by the Fed may cool the world’s largest economy or even tip it into a recession are hitting equities broadly across Asia. Stocks in China also buckled, even as the state council renewed its pledge to use monetary policy tools at an “appropriate time” and consider other measures to boost consumption, according to the readout from a meeting of the State Council chaired by Premier Li Keqiang on Wednesday. “The Fed is telling us that the party is over. It is saying it will take away the punch bowl,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “This will have a serious impact on all risk assets.” Fujito saw tech shares with rich valuations as the most vulnerable, adding that investors will be trying to seek shelter in utilities and defensive stocks. The MSCI Asia Pacific Information Technology Index fell about 2%.  Benchmarks in Japan and South Korea underperformed other Asian peers, while gauges in Australia and India posted smaller declines on Thursday.   For April, the MSCI Asia is now down more than 2% on top of a slump of almost 7% last quarter -- the most since the first three months of 2020 -- amid concern about the war in Ukraine, higher rates and inflation.  Japanese equities fell by the most in almost four weeks, deepening declines in tandem with U.S. peers amid concerns over the Federal Reserve’s plans to tighten monetary policy. Electronics makers and service providers were the biggest drags the Topix, which dropped 1.6%, in its third day of decline. Tokyo Electron and Fast Retailing were the largest contributors to a 1.7% loss in the Nikkei 225.  Minutes from the latest Federal Reserve meeting showed the U.S. central bank is prepared to raise rates sharply and reduce its balance sheet to cool the economy. Indian stocks dropped with peers across Asia as the weekly expiry of derivative contracts weighed on the market.  The S&P BSE Sensex slipped for a third session, dropping 1% to 59,034.95, its biggest fall since March 21. The NSE Nifty 50 Index slipped 0.9%. HDFC Bank retreated 2.2%, while Reliance Industries declined 1.8%. Seventeen of 30 shares on the Sensex traded lower.  Fifteen of 19 sectoral sub-indexes compiled by BSE Ltd. declined, led by a gauge of oil & gas stocks. The Fed’s plan to prune its near $9 trillion balance sheet, which was swollen by pandemic-era bond purchases, points to more volatility in global markets. Locally, the nation’s central bank will likely raise its inflation outlook to reflect costlier oil while leaving borrowing costs steady in its policy decision on Friday. “U.S. Fed’s hawkish stance has raised concerns of steeper interest rate hikes going ahead,” Kotak Securities analyst Shrikant Chouhan said. He sees volatility in global crude oil prices leading to profit taking in Reliance Industries and other energy stocks. The S&P/ASX 200 index fell 0.6% to close at 7,442.80, retreating alongside global peers after the Federal Reserve outlined plans to trim its balance sheet by more than $1 trillion a year while raising interest rates. Life360 was the biggest laggard as tech stocks dropped. Magellan Financial was the top performer after its funds under management update showed a slowdown in net outflows. In New Zealand, the S&P/NZX 50 index was little changed at 12,075.91 In FX, the Bloomberg dollar spot index is near flat, handing back earlier gains that saw it at a three-week high. RUB leads gains in EMFX. In rates, the treasuries curve extends steepening counter-trend as front-end and belly yields retreat further from Wednesday’s YTD highs while long-end cheapens slightly. Yields richer by up to 3bp across front-end of the curve, steepening 2s10s by ~3bp with 10-year little changed near 2.60%; bunds and gilts keep pace. Bund, Treasury and gilt curves all bull steepen. Meanwhile commodity markets continue to be whipsawed by disruptions sparked by Russia’s war in Ukraine and efforts to curb raw-material costs. WTI crude climbed toward $98 a barrel, paring a slump that was triggered by the International Energy Agency’s decision to deploy 60 million barrels from emergency stockpiles. WTI added 1.4% to trade near $98. Brent rises 1.5% to over $102. Most base metals trade in the red; LME nickel falls 2.3%, underperforming peers. Spot gold is little changed at $1,926/oz. Raw materials could surge by as much 40% -- taking them far into record territory -- should investors boost their allocation to commodities at a time of rising inflation, according to JPMorgan. In crypto, bitcoin is pressured and towards the low-end of a range that continues to drift from the USD 45k mark. Meta (FB) is exploring a virtual currency for the metaverse, according to the FT. U.S. economic data slate includes initial jobless claims (8:30am) and February consumer credit (3pm). Fed speakers scheduled include Bullard (9am) and Bostic (2pm). U.S. session highlights include speech and Q&A by St. Louis Fed’s Bullard --who dissented from March FOMC decision in favor of a bigger rate increase -- at 9am ET.  Other central bank speakers include Bostic and Evans, as well as the BoE’s Pill. We’ll also get the minutes from the ECB’s March meeting, along with remarks from the Fed’s Bullard, Market Snapshot S&P 500 futures little changed at 4,476.75 MXAP down 1.4% to 176.33 MXAPJ down 1.4% to 584.33 Nikkei down 1.7% to 26,888.57 Topix down 1.6% to 1,892.90 Hang Seng Index down 1.2% to 21,808.98 Shanghai Composite down 1.4% to 3,236.70 Sensex down 0.7% to 59,191.33 Australia S&P/ASX 200 down 0.6% to 7,442.83 Kospi down 1.4% to 2,695.86 Brent Futures little changed at $101.14/bbl Gold spot up 0.1% to $1,928.10 U.S. Dollar Index little changed at 99.69     Top Overnight News from Bloomberg ECB President Christine Lagarde said she tested positive for Covid-19, adding that her symptoms are “reasonably mild” and that there won’t be any impact on the operations of her institution Surging U.S. real yields suggest bond traders believe the Federal Reserve can get a grip on inflation, but are likely to put further pressure on stocks and precious metals German Economy Minister Robert Habeck said the nation has already cut its reliance on Russian coal by at least half in the past month and won’t stand in the way of a European Union ban on imports of the fuel from the country In the days after the Ukraine war began, the ruble’s collapse was a potent symbol of Russia’s newfound financial isolation. Now, the ruble has surged all the way back to where it was before Putin invaded Ukraine Hungary kept its effective key interest rate unchanged at the highest level in the European Union after the forint plunged on the bloc’s announcement that it is triggering a process that may block the country’s aid funds China signaled it will step up monetary stimulus for the economy, acknowledging that domestic and global risks are now bigger than previously expected Bank of Japan board member Asahi Noguchi says it’s vital to continue with monetary easing as it will take some time before the possibility of shrinking stimulus comes into sight. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded lower throughout most of the session as the downbeat mood reverberated from Wall Street. ASX 200 was dragged lower by its tech sector following a similar sectoral performance in the West. Nikkei 225 was hit by losses across its energy, mining and manufacturing names. KOSPI conformed to the global losses whilst Samsung Electronics (-0.3%) failed to benefit from better-thanexpected prelim earnings. Hang Seng and Shanghai Comp were choppy and initially swung between gains and losses before stabilising in the red. Samsung Electronics (005930 KS) - Prelim Q1 (KRW) Revenue 77tln (exp. 75.7tln), Operating Profit 14.1tln (exp. 13.3tln), via Reuters Top Asian News Suspected Chinese Hackers Collect Intel From India’s Grid SoftBank Tripled Share Buybacks to $1 Billion in March Thailand Mulls Easing Covid Test Rules for Overseas Visitors Japan to Release 15m Barrels From Oil Reserves: Kyodo European bourses are firmer across the board and back in proximity to post-cash open levels after initial strength waned in choppy price action, Euro Stoxx 50 +0.7%. US futures have been relatively in-fitting with European peers, though the NQ, +0.5%, is the modest outperformer as yields take a breather from their recent surge. China's Shanghai City is to cap the load factor of international flights by foreign airlines at 40% (prev. 75%), according to Reuters sources; effective from April 11th until month-end. Top European News Turkey Transfers Khashoggi Case to Saudi Arabia to Improve Ties Shunned Oil Piling Up Off China as Virus Outbreak Worsens EU Full Ban on Russia Coal to Be Delayed Until Mid-August: Rtrs Yellen Says U.S. Would Use Sanctions If China Invaded Taiwan FX: Greenback sets marginal new YTD best after hawkish FOMC minutes reveal tight call between 25 bp and 50 bp lift-off plus large cap balance sheet reduction, DXY up to 99.823, thus far. Albeit, the DXY has waned from best levels and turns flat ahead of the arrival of US participants as yields continue to pare Euro eyeing option expiries for support ahead of ECB minutes following loss of 1.0900 handle vs Dollar; EUR/USD down below Fib at 1.0895. Aussie unwinds more RBA inspired upside as trade surplus narrows on zero export balance; AUD/USD around 0.7475 vs circa 0.7661 only yesterday. Yen benefits from retreat in yields rather than BoJ rhetoric reaffirming ultra easy policy and merits of a weaker currency, USD/JPY capped below 124.00. Commodities: Crude benchmarks consolidate near WTD lows after reserve release pressure; specifically, near lows of USD 95.43/bbl and USD 100.13/bbl for WTI and Brent. Updates elsewhere have been slim, and focused on China's Shanghai City from a demand-side perspective amidst ongoing Ukraine-Russia developments; albeit, nothing fundamentally new in terms of negotiations. China is to strictly control new production capacity in the oil refining industry, according to the industry ministry Gas flows via Yamal-Europe pipeline resume westward, according to Gascade data. Spot gold/silver are contained and the yellow metal is once again capped by USD 1930/oz and LME Copper has failed to benefit from the equity pickup. US Event Calendar 08:30: April Initial Jobless Claims, est. 200,000, prior 202,000; Continuing Claims, est. 1.3m, prior 1.31m 15:00: Feb. Consumer Credit, est. $18.1b, prior $6.84b Central Bank Speakers 09:00: Fed’s Bullard Discusses the Economy and Monetary Policy 14:00: Fed’s Bostic and Evans Discuss Inclusive Employment 16:05: cancelled: Fed’s Williams Makes Closing Remarks DB's Henry Allen concludes the overnight wrap We might be less than a week into Q2, but based on how markets are performing it’s shaping up to be very similar to Q1 thus far, with yesterday seeing another bond selloff and significant declines for global equities as markets gear up for the fastest monetary tightening we’ve seen in decades. Indeed, it seems to be progressively dawning on investors that this cycle of hikes is going to be very different to the one we saw from 2015, when even at its fastest in 2018, the Fed still only hiked rates by 100bps in a single year. As Jim has written, if we could erase the post-GFC cycle from people’s memory banks, there’s a case that markets would be pricing 300-400bps this year given where inflation is right now, not least given we saw hikes on that scale in the late-80s and from 1994 with inflation at much lower levels than it is at the minute. Given the rapid expected tightening (as well as the negative shock of Russia’s invasion of Ukraine), it’s worth noting that DB Research’s new World Outlook came out on Tuesday, (link here), where we downgraded our global growth forecasts and are now forecasting a US recession by the end of next year as our baseline. We also got a look into the Fed’s outlook yesterday with the release of the March FOMC minutes, where it looks like they would have hiked by 50bps in March were it not for the Russian invasion, and they are ready to entertain 50bps hikes going forward. The markets got the message, and upgraded the probability of a 50bp hike at the next meeting in early May to 85%. The other big takeaway from the minutes were details around QT, which they signalled would start in May, in line with recent Fed speakers. The FOMC noted the balance sheet would rundown at a pace of $60bn Treasuries and $35bn MBS a month once QT hits terminal velocity, which should be by July if the minutes are to be believed. Markets digested the news, with Treasury yields more or less in line with their pre-minute levels into the close after declining modestly in the New York afternoon. With the pace of the runoff now set, the focus will turn to who buys the securities with the Fed stepping away and when the Fed has to stop QT. Alongside the minutes, remarks from a number of officials yesterday helped to reiterate the point that policy will become tighter this year. Philadelphia Fed President Harker said that he expected “a series of deliberate, methodical hikes as the year continues”, whilst on the question of whether to move by 50bps, Richmond Fed President Barkin said that the FOMC “could certainly do that again if it is necessary to prevent inflation expectations from unanchoring”. With all said and done, sovereign bond yields moved up to fresh highs on both sides of the Atlantic, with those on 10yr Treasuries up +5.1bps to 2.598%, which was its highest closing level since 2019, albeit some way beneath its intraday high of 2.656% shortly before noon in London, and this morning they have fallen a further -1.5bps to 2.583%. That increase yesterday was entirely driven by a rise in real yields, which rose +7.3bps to -0.24%, their highest level since March 2020, whilst a rally at the short end of the curve meant the 2s10s slope steepened for a 3rd day running, heading up to 12.2bps by the close. Those declines in shorter-dated yields came as futures actually took out a bit of Fed tightening from 2022, modestly reducing the expected number of additional hikes this year from 220bps in the previous session to 217bps by the close. Over in Europe there were similar moves, with sovereign bond yields reaching fresh highs before paring back some of that increase towards the close. Yields on 10yr bunds (+3.3bps), OATs (+3.1bps) and BTPs (+3.8ps) all closed at multi-year records, although a key difference with US Treasuries were that the rise in European yields yesterday were driven by higher inflation expectations rather than real rates. In fact the 10yr German breakeven hit 2.81%, its highest in the data series that starts back in 2009, whilst the Italian 10yr breakeven hit 2.63%, its highest since 2008. As on Tuesday, the selloff in bonds went hand in hand with further declines in equities, and by the close the S&P 500 (-0.97%) and Europe’s STOXX 600 (-1.53%) had both lost ground as well, with cyclical sectors leading the declines. Tech stocks in particular were an underperformer once again, and the NASDAQ (-2.22%) and the FANG+ index (-3.46%) both struggled again, bringing their declines over the last 2 sessions to -4.43% and -6.63% respectively. Amidst the equity declines, the VIX index of volatility rose +1.1pts yesterday to 22.1pts, taking it up to its highest level in 2 weeks. Overnight in Asia, equities have very much followed that retreat on Wall Street as monetary tightening remained in focus. Among the main indices, the Nikkei (-2.00%) is leading the moves lower, whilst the Kospi (-1.42%), Hang Seng (-1.04%), Shanghai Composite (-0.99%), and the CSI (-0.78%) are also trading in negative territory. Separately, we heard from China’s State Council yesterday that they would use monetary policy at an “appropriate time”, as they acknowledged downward pressures on the economy. Looking forward, stock futures in the US are pointing to further declines today, with contracts on the S&P 500 (-0.37%) and Nasdaq 100 (-0.33%) both lower following those Fed minutes. In terms of the latest on Ukraine, the EU continued to edge towards a fresh sanctions package, although that wasn’t finalised yesterday as had initially been suggested, with Reuters reporting that technical issues needed to be addressed like whether the ban on Russian coal would affect existing contracts. The report said that diplomats were optimistic about achieving a compromise today, so we could potentially see some news on that later, whilst in his speech to the European Parliament yesterday, European Council President Charles Michel also said that “I believe that measures on oil and even on gas will also be needed sooner or later.” Otherwise on sanctions, the US imposed further measures, including full blocking sanctions on Sberbank and Alfa Bank, along with a prohibition on new investment in Russia. The various decisions came amidst a further decline in oil prices yesterday, with Brent crude down -5.22% to $101.07/bbl, its lowest closing level in 3 weeks. That was supported by confirmation that the International Energy Agency would release 60m barrels of crude, on top of the Biden Administration’s release from the Strategic Petroleum Reserve. Brent has recovered somewhat this morning however, up +1.85% to $102.94/bbl. Turning to the French presidential election, we’re now just 3 days away from the first round on Sunday, and the polls have continued to tighten between President Macron and his main challenger Marine Le Pen. Yesterday’s polls for the second round runoff put Macron ahead of Le Pen by 54%-46% (Ipsos), 53-47% (Opinionway), and 52.5%-47.5% (Ifop), which are all much tighter than the 66%-34% margin in the 2017 election. French assets have continued to underperform against this backdrop, with the CAC 40 equity index (-2.21%) seeing a weaker performance than the broader STOXX 600 (-1.53%) for a 6th consecutive session. On yesterday’s data, the Euro Area PPI reading for February came in at a year-on-year rate of +31.4% (vs. 31.6% expected), which is the fastest pace since the formation of the single currency. Separately, German factory orders contracted by a larger than expected -2.2% in February (vs. -0.3% expected). To the day ahead now, and data releases include German industrial production and Euro Area retail sales for February, along with the weekly initial jobless claims from the US. Meanwhile from central banks, we’ll get the minutes from the ECB’s March meeting, along with remarks from the Fed’s Bullard, Bostic and Evans, as well as the BoE’s Pill. Tyler Durden Thu, 04/07/2022 - 07:49.....»»

Category: blogSource: zerohedgeApr 7th, 2022

DEBT DIARIES: 20 stories of the student-debt "hamster wheel" that borrowers of all ages and incomes can"t escape

Insider spoke with over a dozen student-loan borrowers stuck with huge debt loads. They're a small part of a $1.7 trillion crisis in the US. Marianne Ayala/InsiderThe $1.7 trillion student-debt crisis in the US continues to grow, making the burden heavier for millions of Americans.Since March 2020, as part of pandemic relief measures, federal borrowers have not had to make student-loan payments, and interest on the loans has been waived. President Joe Biden recently extended the pause for a third time, through May 1, citing uncertainty with the Omicron variant. Advocates and lawmakers lauded the decision and the additional relief for 43 million federal borrowers.But even during the payment pause, many borrowers did not feel relieved. The looming date for restarting payments sparked anxiety and fear among some borrowers who knew that even though they had not been required to pay off their debt over the past two years, they would not be able to afford an additional bill in just a few months. That's why some Democratic lawmakers are calling for Biden to cancel student debt for every federal borrower."More than 40 million Americans have benefited from the federal pause on student-debt payments, but without cancellation they will be buried under a mountain of debt once again," Sen. Elizabeth Warren of Massachusetts told Insider. "The president campaigned on canceling at least $10,000 in student debt, he has the executive authority, and now is the time to deliver."Over the past year, Insider has spoken with over a dozen borrowers who shared their experiences with the "hamster wheel" of student debt, its impact on their lives and their families, and their fears that their debt will follow them to their graves. Here are their stories.Older people are giving up hope of paying off their student loans before they die: 'There's a real fear in dying in this'Marianne Ayala/InsiderOver 8 million borrowers over 50 hold 22% of the federal student-debt load. The burden can be so heavy that some of those Americans will never see a life without student debt.Three borrowers who fall into that category — David Wise, Linda Navarro, and Theresa Teders — shared how their debt had permanently altered their lives. They said they don't see it going away until they die.Read the full story here.Inside the 'vicious cycle' of spiraling student-loan debt caused by servicers just not picking up the phoneMarianne Ayala/InsiderPaying off student debt is one challenge. Getting help from a student-loan company to actually pay off that debt is a whole other hurdle.Two borrowers, Charles Moore and Lynda Costa, tried to contact the company that collects their debt for assistance with repayment, but hours-long waits and inaccurate information only caused their debt loads to surge even more.Read the full story here.'It's mind-boggling to me that this total amount is not going down. It's not going away': 2 borrowers describe the crushing interest that keeps them from paying off their debtMarianne Ayala/InsiderHigh interest rates are largely to thank for the $1.7 trillion student-debt load in the US, keeping borrowers from paying off balances far higher than what they initially borrowed.Alexandria Mavin and Daniel Tapia are trying to pay off their student debt, but interest keeps adding on to their monthly bills, trapping them in a cycle of repayment.Read the full story here.Meet a married couple with $130,000 in student debt after paying off $140,000 — but they started with just $54,000. 'The loans have always stayed one step ahead of us.'Marianne Ayala/InsiderRon and Marcia Rizzardi are a clear example of the toll that high interest rates can have on student debt loads. The couple started out with a combined $54,000 in debt from their educations, and over the past 25 years they've made $140,000 in payments. Today, they owe $130,000, and they don't see it going away anytime soon.Read the full story here.Meet a single grandmother raising 3 grandchildren with $75,000 in student debt: 'I don't want my grandkids to be in poverty'Marianne Ayala/InsiderGwen Carney, 61, is raising her grandchildren on her own — with $75,000 in student debt. She desperately wants to give her grandkids the lives they deserve, but in order to do so she has to work a full-time job while sewing face masks on the side for some extra cash. The pandemic pause gave her relief, but she worries she won't be able to afford to pay her student debt and support her grandkids when payments resume.Read the full story here.Meet a recent college grad with $143,000 in student debt: 'There have been times when I didn't eat' to afford the paymentsMarianne Ayala/InsiderWhile the student-loan payment pause extended to federal borrowers, those with private student loans continued to see their debt grow.Karla, a recent college graduate, has a student-debt load of $143,000, with $91,000 coming from private loans. Even though she's kept up with her monthly payments, the high interest is keeping her from even touching the amount she originally borrowed.Read the full story here.Meet a single dad with $550,000 in student loans for his 5 children: 'I'm just not going to take the chance on not sending my kids to school'Marianne Ayala/InsiderMillions of parents across the country want their kids to access higher education but can't afford to do so on their own. So they take out Parent PLUS loans on behalf of their children to cover up to the cost of attendance.While it's an easy loan to get, it's very difficult to pay off. Just ask Reid Clark, a 57-year-old single father with $550,000 in student debt for his five children. He said he didn't regret sending his kids to school, but he wished it had been harder for him to take on so much debt.Read the full story here.Meet a 64-year-old dad delaying retirement because of $265,000 in student debt for his 2 kids: 'I was going to do whatever was necessary to get my kids through'Marianne Ayala/InsiderRobert Pemberton wanted his two kids to succeed — and it came at the cost of $265,000 in student debt. He said that although he now makes a livable salary, his debt load became unmanageable after periods of unemployment and his wife's cancer treatment. He isn't sure when he will retire, thanks to the high interest rates on PLUS loans.Read the full story here.Meet a 57-year-old dad with $104,000 in student debt for his son: 'It was my obligation to do the best I could for him'Marianne Ayala/InsiderJeff O'Kelley, 57, has $104,000 in student debt from loans he took out to send his son to college. Like many parents who made the same decision, he said he didn't regret accumulating debt to give his son the best future possible. But he believes the "extraordinarily simple" process he followed to take on debt needs to change.Read the full story here.Meet a 62-year-old veteran with $104,000 in student debt after working in public service for 4 decades: 'I joined the Army to escape poverty. This is a different kind of poverty.'Marianne Ayala/InsiderJeffrey Spencer thought joining the Army in 1976 would give him access to a free education. It didn't, and now, at 62, he has $104,000 in student debt. And while he works for the state of California, which would make him eligible for the Public Service Loan Forgiveness program, failures in the program led to his being denied repeatedly. He said he was tired of broken promises.Read the full story here.Meet a therapist with $81,000 in student debt who worked in public service for 20 years and can't get loan forgiveness: 'People in the helping professions are getting totally screwed over'Marianne Ayala/InsiderSince 2017, when the first group of borrowers became eligible for the Public Service Loan Forgiveness program, which forgives student debt for public servants after 10 years, it's run up a 98% denial rate.Lindsay Averbook, who has $81,000 in student debt, is one of the rejected borrowers. She's worked in public service — in mental-health care — for her whole career, and she said she didn't understand why it's taking so long to get the student debt relief she deserves.Read the full story here.Meet a single mom and adjunct professor with $430,000 in student debt: 'I'm in a hole that I'm never going to get out of'Marianne Ayala/InsiderMaria firmly believes her $430,000 student-debt load was not worth it. She'd thought that pursuing a master's degree and a Ph.D. would land her a job teaching at a university, and she extensively researched the programs and their outcomes to ensure they were worth the cost. But a layoff and medical bills for her daughter's cancer treatment set her on a different course, and she said she sees herself dying with her student debt.Read the full story here.Meet an independent voter with $163,000 in student debt who left the Democratic Party after 4 decades because she felt 'betrayed' by Joe Biden: 'I really felt he was going to help us with the student-loan problem'Marianne Ayala/InsiderAs a presidential candidate, Joe Biden pledged to approve forgiving $10,000 in student loans for every federal borrower. He won Melissa Andretta's vote with that pledge.Andretta, who has $163,000 in student debt, said she'd thought Biden would help with the student-loan crisis in the US, but now she feels "betrayed."Read the full story here.Meet a first-generation college grad with $250,000 in student debt: 'It's the price I had to pay to achieve the American dream'Marianne Ayala/InsiderObtaining a higher education is a pillar of the American dream, and it's one that Juan Antonio Sorto, a first-generation college student, wanted more than anything. The cost of achieving that dream was $250,000 in student debt.Sorto said that while he was proud of his accomplishments and the life his education had given him and his family, he wished President Joe Biden would do more to ensure others don't have to take on so much debt for an education.Read the full story here.Meet a single mom who took on $49,000 in student debt to put one of her 2 daughters through college: 'It's the only way for my kids to get an education and be successful'Marianne Ayala/InsiderDanet Henry, 53, is a single mom of two with a $49,000 student debt load for her oldest daughter. And once her youngest daughter graduates in three years, that balance will likely double. That's because Henry took on PLUS loans — the most expensive type of federal loan — and while she knows she has to pay back her debt, she wishes parents could be included in relief programs.Read the full story here. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderApr 4th, 2022

Biden needs to "make clear" to student-loan borrowers his "intention to cancel a meaningful amount" of debt, nearly 100 Democratic lawmakers say

Biden "has a historic opportunity to repair the damage caused by decades of policy failures" on student debt, Elizabeth Warren and Chuck Schumer said. Flanked by Senate Majority Leader Chuck Schumer (D-NY) and Rep. Ilhan Omar (D-MN), Sen. Elizabeth Warren (D-MA) speaks during a press conference about student debt outside the U.S. Capitol on February 4, 2021 in Washington, DC.Drew Angerer/Getty Images Nearly 100 Democratic lawmakers urged Biden to extend the student-loan payment pause before May 1. They also wrote he should cancel a "meaningful amount" of student debt. It's the latest of many letters from lawmakers pushing for immediate student-loan relief. Democratic lawmakers aren't too worried about clogging President Joe Biden's mailbox when it comes to the student debt crisis.On Thursday, nearly 100 of them sent yet another letter to Biden urging him to "act now" to extend the student-loan payment pause beyond its expiration date on May 1, along with cancelling a "meaningful amount" of student debt. Led in part by Sens. Elizabeth Warren and Chuck Schumer — two of the biggest voices for student-loan forgiveness in Congress — the lawmakers noted that White House Chief of Staff Ron Klain's recent comments about the potential for student-loan relief were encouraging, and it's time for Biden to finish the job."Although there may be different ideas about the best way to structure cancellation, we all agree that you should cancel student debt now," they wrote, adding that "given the fast-approaching deadline for borrowers to resume payments, your administration must act as quickly as possible to extend the pause and make clear to the American public your intention to cancel a meaningful amount of student debt."This is just the latest of letters from Democratic lawmakers asking for student-debt relief in the form of loan forgiveness, an extension of the payment pause, and fixes to the student-loan industry. While Klain said earlier this month Biden will decide to either extend the pause or determine what he can do using executive action, relief has yet to be announced and the payment resumption date is just a month away, worrying borrowers who know they cannot afford another monthly bill.Notably, the lawmakers' Thursday letter does not specify a specific amount of student debt they would like to see canceled, splitting from some of their previous efforts urging Biden to cancel at least $50,000 in debt for every federal borrower. That's also the strategy the Congressional Progressive Caucus recently took on — canceling student debt was on the list of priorities it wants Biden to take on via executive action, but chair of the caucus Pramila Jayapal told reporters that she did not recommend a specific amount of relief because the goal right now is to "make progress" on the crisis."I have been calling for at least $50,000. The president promised at least $10,000 during the campaign. So the number is somewhere in the midst of that," Jayapal said. The stakes are especially high now, with midterm elections approaching. A Data for Progress/Rise survey provided exclusively to Insider found that nearly half of likely voters in key battleground states would be more likely to go to the polls if Biden fulfilled his $10,000 student-loan forgiveness campaign pledge.To be sure, Biden has canceled student debt for targeted groups of borrowers, like those defrauded by for-profit schools, but lawmakers and advocates argue it's not enough, and now's the time to deliver."While we applaud your efforts to date – including targeted relief for disabled borrowers, victims of for-profit colleges, and others as well as working to fix existing programs like Public Service Loan Forgiveness – these efforts still leave the majority of federal student loan borrowers out," the lawmakers wrote. "Right now, your administration has a historic opportunity to repair the damage caused by decades of policy failures, government mismanagement, and industry abuses by extending pandemic relief and canceling student debt."Read the original article on Business Insider.....»»

Category: dealsSource: nytApr 1st, 2022

AOC has a message for student-loan borrowers hoping for debt forgiveness: "Keep bullying the White House"

Her comments follow Sen. Chuck Schumer's plea for Americans to write to the White House every day regarding broad student-loan forgiveness. Rep. Alexandria Ocasio-Cortez and Senate Majority Leader Chuck Schumer.Kent Nishimura/Los Angeles Times via Getty Images AOC wrote on Instagram that student-loan borrowers should "keep bullying the White House" for relief. This is the latest call urging borrowers to keep pressure on Biden to cancel student debt. Student-loan payments are set to resume on May 1, and Biden has not yet detailed further plans. New York Rep. Alexandria Ocasio-Cortez wants to ensure Americans aren't letting the White House off the hook when it comes to student-loan forgiveness."FYI, it does not take an act of Congress to cancel student debt," Ocasio-Cortez wrote on Instagram on Thursday. "Biden could do it tomorrow if he wanted to. Keep bullying the White House. It has been successful in delaying payments but now we gotta finish the job."In December, President Joe Biden extended the pause on student-loan payments, with waived interest, for his third time. Payments are now set to resume May 1. And while he cited uncertainty with the Omicron variant as the reason for an additional extension, lawmakers like Ocasio-Cortez said it was the consistent pressure from advocates on the president that led to additional relief for 43 million federal borrowers. Now, with the expected payment resumption date quickly approaching, some advocates and Democratic lawmakers are ramping up the pressure on Biden to not only extend the pause on loan payments a fourth time, but to cancel a large share of the $1.7 trillion student debt crisis.Senate Majority Leader Chuck Schumer seemed to agree with Ocasio-Cortez on the importance of putting pressure on the White House. In a conversation with Voto Latino this week, an organization that works to empower Latino voters, Schumer said, "We're trying to get 15 million emails, letters, calls to the White House to ask President Biden to use his pen and cancel student loans. And if you can do that, it will help." "If he hears from so many people, and particularly so many young people and so many young women, people of color, who are his base, it'll help. I think he wants to do it, we just need to push him," Schumer added.As of now, Biden has not detailed plans for further student-loan relief, whether in the form of another payment pause extension or broad forgiveness. But White House Chief of Staff Ron Klain recently said more relief might be on the way before May."The President is going to look at what we should do on student debt before the pause expires, or he'll extend the pause," Klain said, adding that "the question whether or not there's some executive action on student debt forgiveness when payments resume is a decision we're going to take before payments resume." Republican lawmakers have criticized the idea of further relief, saying broad loan forgiveness would cost taxpayers and the economy — but progressives have maintained their stance that borrowers need further relief. On Thursday, the Congressional Progressive Caucus (CPC) released a list of eight policy areas it wants Biden to tackle by executive action, and canceling federal student debt was one of them."45 million Americans are stuck in the student debt trap, preventing them from buying homes, starting families, and investing in their communities," the agenda said. "This crisis disproportionately affects Black and Brown borrowers, who are seeing student debt drag down their finances even past retirement age. The CPC is calling on the Biden administration to put money in millions of people's pockets by using existing authorities to cancel federal student loan debt."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 18th, 2022

Meet an independent voter with $163,000 in student debt who left the Democratic Party after 4 decades because she felt "betrayed" by Joe Biden: "I really felt he was going to help us with the student-loan problem"

"I always felt like the Democrats were supposed to be the party of the people," said Melissa Andretta, who was injured and couldn't finish her degree. President Joe Biden.Evan Vucci/Associated Press Melissa Andretta, 53, was a registered Democrat for four decades and voted for Joe Biden. She felt "betrayed" by Democrats because of inaction on student debt and is now an independent. With $163,000 in student debt, she says she's worried about loan payments resuming next year. President Joe Biden won Melissa Andretta's vote in 2020 when he promised to fix the student-loan industry and cancel student debt. But Andretta's student-debt load, at $163,000, hasn't gone down since Biden took office, and she told Insider she felt "betrayed.""I've been registered as a Democrat since I was of voting age," said Andretta, now 53. "But throughout this last year, I was an independent instead because I'm just so frustrated and disheartened. One of the main reasons why I was so in favor of Biden was because I really felt that he was going to help us with the student-loan problem."Melissa Andretta, 53, has $163,000 in student debt.Melissa AndrettaAll of Andretta's debt comes from the Ph.D. she sought from Teachers College at Columbia University in 1999. She was unable to finish the program because of back surgery that prevented her from traveling to and from Manhattan. Though she wanted to finish her degree once she recovered, "the thought of taking out more loans was just too prohibitive," she said.Since leaving her Ph.D. program, Andretta has worked as a special-education teacher, and she now runs her own agency where she works with children and adolescents with autism. She said her career options are limited because when she's no longer able to physically work with children because of her age, she won't have an advanced degree to fall back on. Even worse, the ballooning interest has left her repaying three times what her partial degree cost. "It's so scary and so frustrating that at 53, I'm still looking at $160,000 worth of debt when I only borrowed a third of that," Andretta said. "So it's just so frustrating. And so frightening. It's a very vulnerable position."'I have more anxiety than I've had in years'Andretta put her loans into forbearance for about five years after her surgery because she was not making sufficient income to afford the $850 monthly bills. During that time, interest caused her student debt to surge from the $40,000 original balance.Although she now makes a six-figure salary, the majority of her income went to her monthly student-loan bills before student-loan payments were paused during the pandemic, and she's only been able to put "the tiniest amount" into her savings account and 401(k) since. "I don't know that I'll ever be able to retire," Andretta said. "I don't even know if I'm going to be able to continue living in New York. I've been looking at other options in other states because it's so expensive to live here with these additional bills that are going to be coming my way."As of now, the Education Department is preparing to transition 43 million federal student-loan borrowers back into repayment on February 1, after what would be an almost two-year pause. Some advocates and lawmakers are sounding the alarm that the pandemic is ongoing and borrowers aren't yet financially equipped to take on additional bills."This debt is just overwhelming for people," Senate Majority Leader Chuck Schumer recently said. "If we don't extend the pause, interest rates just pile up. Students owe a fortune. And with Omicron here, we're not getting out of this as quickly as we'd like."Andretta agreed. "I'm basically living paycheck to paycheck," she said. She added, at the thought of having another $400 bill coming in February, "I have more anxiety than I've had in years."'Democrats were supposed to be the party of the people'During his presidential campaign, Biden promised to fix flawed student-loan-forgiveness programs and approve $10,000 in student-debt cancellation immediately. He has followed through on some of those promises: His Education Department recently announced reforms to the Public Service Loan Forgiveness program, which forgives debt for public servants, such as teachers, after ten years of qualifying payments but ran up a 98% denial rate.He has also canceled about $11.5 billion in student debt for targeted groups of borrowers, such as those defrauded by for-profit schools, which are actions provided to him under the law. But when it comes to broad student-debt cancellation, Biden has remained quiet on the topic, and many borrowers are disappointed. For example, an independent voter recently appeared on CNN to weigh in on Biden's actions so far, and she gave the president a B-minus rating for not yet delivering on his student-debt promises."I would definitely say he has delivered on many promises, but some of them he has not," Amikka Burl, an independent voter, said on CNN. "He promised when he was actually running, on his campaign trail, that he would wipe out $10,000 worth of student-loan debt for every individual that has student loans. That has yet to come to fruition, so I am waiting for that to happen."The clock is ticking for Democrats to act on the $1.7 trillion student-debt crisis, especially with midterm elections next year. Andretta said it would "certainly play a role" in whom she votes for in upcoming elections."I always felt like the Democrats were supposed to be the party of the people," she said. "And I could never see myself moving anywhere else but the party of the people. But I'm one of those people, and I don't feel like they represent me at this point in time. So I really have to reconsider what my options are."Do you have a story to share about student debt? Reach out to Ayelet Sheffey at asheffey@insider.com.Read the original article on Business Insider.....»»

Category: personnelSource: nytDec 12th, 2021

The Impact of Student Loan Debt: Is Now the Time for Governmental Action?

A new study from the National Association of REALTORS® (NAR) shows that student loan debt is delaying 60% of non-homeowning millennials from purchasing their first homes. The survey further demonstrates that 51% of all holders of student loan debt have had home-purchase delays because of it. Overall, the Federal Reserve estimates that Americans have a […] The post The Impact of Student Loan Debt: Is Now the Time for Governmental Action? appeared first on RISMedia. A new study from the National Association of REALTORS® (NAR) shows that student loan debt is delaying 60% of non-homeowning millennials from purchasing their first homes. The survey further demonstrates that 51% of all holders of student loan debt have had home-purchase delays because of it. Overall, the Federal Reserve estimates that Americans have a total of $1.73 trillion in student loan debt. Congress and the White House are looking for ways to solve what many are calling a full-blown crisis. There is no shortage of potential solutions being discussed. Public-Private Partnerships According to the survey, 59% of borrowers said that student loan debt repayment would affect their decision to take a job or not. Given the uneven labor market and issues with attracting and retaining talent, some employers are taking advantage of a lesser-known public-private partnership provision in the Coronavirus Aid, Relief and Economic Security (CARES) Act. The act, passed in March 2020, allows employers to pay up to $5,250 toward student loans for their employees. The employees would in turn not owe federal taxes on the debt payments. The provision has subsequently been extended through 2025. Loan Forgiveness One of the hottest points of debate concerns student loan debt forgiveness. Advocates argue that broad student loan debt forgiveness is the only real solution for a crisis that is hammering potential homebuyers. Those opposed to student loan debt forgiveness point to the proposal’s high cost and generations of students who paid their debt and were not offered loan forgiveness. Progressive advocates and some Congressional Democrats have pushed the administration to cancel anywhere from $50,000 to $100,000 for borrowers. The White House hasn’t yet acted, but is rumored to support no more than $10,000 in relief. Education and Other Reforms While not dealing with the debt crisis explicitly, some have argued for further borrower education, including counseling and discussions about the necessity of secondary education along with the true costs of a college education coupled with the future earning potential of some degrees. The Department of Education has also taken steps to curtail student debt issues, including temporary reforms to the Public Service Loan Forgiveness Program. They have also created a working group that will evaluate and recommend potential solutions, such as programs that would help borrowers with disabilities, borrowers who were defrauded by for-profit colleges and changes to arbitration agreements. What’s Next As Congress finishes its work on infrastructure investments, it will begin to look at other areas of reform. NAR will continue to raise awareness about the importance of financial education for borrowers, improving opportunities to refinance student debt, supporting businesses that offer student debt forgiveness through tax breaks and supporting the elimination of taxes for borrowers whose debt is paid by an employer. For more information, visit www.nar.realtor/student-loan-debt. Matthew Emery is a senior policy representative, Financial Services, for the National Association of REALTORS®. The post The Impact of Student Loan Debt: Is Now the Time for Governmental Action? appeared first on RISMedia......»»

Category: realestateSource: rismediaDec 3rd, 2021

Government Handling Of COVID Has Been "A Crime", Expect More Selloffs: Trader

Government Handling Of COVID Has Been "A Crime", Expect More Selloffs: Trader Submitted by QTR's Fringe Finance This is Part 1 of an exclusive interview with Rosemont Seneca, a U.S. based professional trader focused on event-driven and distressed situations. Rosemont spent their career on the buy-side working as a financials analyst and their investing/trading style is inspired in equal parts by Icahn and Druckenmiller. Like me, Rosemont is not an RIA and does not hold licenses. Market commentary and opinion expressed in this interview are personal views, not investment advice or solicitation for business. QTR’s Note: The point of this blog is to bring to the reader information and perspectives they, or the mainstream media, may not otherwise find on their own. The cool thing about FinTwit is that you get to meet people based on their ideas and investing acumen and not their identities. I have been following Rosemont on Twitter for years and love their perspective and takes on the market - their takes often stand at odds with my own and they have helped me broaden my horizon and be less bearish on markets, while still maintaining my skepticism about monetary policy. They have chosen to remain completely anonymous with me, which I respect, and I have never personally met or otherwise know anything about the identity of Rosemont. That doesn’t matter, however, because I like their ideas and their commentary. You can follow Rosemont on Twitter here. Part 2 of this interview can be found here. Bernard Baruch, 1919 / Photo used for @rosemontseneca's Twitter profileQ: Hi Rosemont. Thanks for agreeing to an interview for my readers despite wanting to stay anonymous. Right off the bat: why do you use Bernard Baruch for your Twitter profile photo? Baruch is one of the most fascinating Wall Street characters of 20th Century. He has tremendous intuition and gut instinct for the markets, macro economics and politics and he reminds us that the three are intertwined at all times That’s a great segue to my next question: you recently got very bullish on gold when you hadn't been in the past - what caused that shift in attitude? We saw a global risk contagion event in capital markets today (11/26); Bitcoin lost over 8.0% of its value, the S&P dropped -2.2% and gold ended the session flat on the day after a mostly positive session. We expect more days like this in 2022. This is the first time since the post-GFC period in 2009 that we’ve purchased or held gold instruments in our portfolios. At present we own an 8.0% position in the GLD ETF and periodically traffic in Barrick Gold and Newmont equities. Recall that during the Q4 2018 ‘Taper Tantrum’ and most acute phase of the COVID dislocation in Q1-Q2 2020, gold futures, ETFs, and gold miner equities protected your wealth from severe capital market drawdowns. Gold is an umbrella we hope will keep us dry if it rains very hard next year. Holding gold in a portfolio today is a pragmatic ‘TINA’ bet borne of healthy caution in the wake of a multi-year equity bubble that has begun to run amok. The reality is gold is not an optimal investment for compounding wealth in the long-run; owning the GLD ETF since inception in 2004 has returned a roughly 8.0% CAGR which is adequate for a pension fund or retiree but relatively mediocre vs. the alternatives. Investors are better off owning Walmart, Costco, McDonald’s or Starbucks and grow our capital tax-efficiently with high-ROE/RoIC ‘compounders’ that pay dividends. The gold ‘streamers’ such as Wheaton and Franco-Nevada however happen to be very interesting investments with compelling business models that have generated compounder-like returns for Shareholders over the last two to three decades. We’ve come a long way from the market depths of March 2020 and perhaps it’s time to take a more cautious stance going into year-end. We are currently operating on the premise that the Nasdaq and S&P could see negative returns in 2022. If the indices see a drawdown of 10-20% (or greater) we expect gold to appreciate or hold its value in real terms next year. There are labor and supply chain shortages globally that will definitely impact the gold mining industry. If CPI hits escape velocity and reaches 8-10% higher next year, we’ll be content with a 10% allocation in gold as we expect institutional and speculator capital flows to put a firm bid behind the yellow metal. You're one of the very few out there calling the entire crypto space a bubble. What's the key argument in differentiating crypto from other assets? Is crypto worth zero or is there a value and, if there is, where does the value come from? In the last few years market participants have adopted a pseudo-religious attitude towards Bitcoin, Ethereum, and a whole host of crypto currencies. People have come to either ‘believe’ or ‘not believe’ in the asset class and its prospects. What we can definitely say today is that there are over 14,850 different crypto currencies trading on over 430 venues with a combined ‘market capitalization’ of roughly $2.5 trillion dollars. To our best knowledge these assets produce zero cash flow or dividends, exhibit very high volatility, remain subject to boom-bust sequences, and are used as an apparatus for elaborate criminal hacking schemes. Photo: Time.comThe average daily volume of these 14,000+ crypto currencies is roughly $150 billion per day. We estimate that approximately 90% of this turnover is driven by purely speculative or gambling capital flows from small retail traders. If we assume that roughly 2-3% of average daily volume consists of bona fide commercial transactions (including portfolio investment), this leaves almost $10 billion of daily volume that derives from money laundering, fraud and other illicit schemes etc. Some governments have rushed to legalize, adopt or allow for crypto currencies to proliferate in their economy for fear of stymieing or not supporting innovation. Others have taken a hardline stance and begun to outlaw the usage of crypto in their banking and financial system. We are of the view that Bitcoin-like protocols present a clear & present danger to many emerging market countries' ability to issue currency and sovereign debt over the next decade. As the true nature of these crypto assets become more evident, we’ll see more and more countries outright ban and prosecute their usage in their economies. Bitcoin and Ethereum (combined 60% of total crypto market capitalization) may very well survive and find a way to thrive due to ‘fiat-by-consensus’ adoption. Under that scenario they clearly will not trade to zero. But that doesn’t negate the presence of a current bubble where 99% of cryptos are of near-zero ultimate value. Promoters have come to euphemize cryptocurrencies as ‘projects’ but most cryptocurrencies are outright frauds.   We think it’s time for crypto investors and regulators to have a more honest, empirical framework for discussing the intrinsic value and risks of these crypto assets. If we can handicap real estate on cap rates and LTV ratios and equites on P/E ratios and cashflow yields, we should adopt a framework for Bitcoin and Ethereum etc (Dogecoin?) that doesn’t border on the pseudo-religion. I wrote an entire article based off your assumption that we are once again in a 1999-2000 style crash setup. What were the signs that helped you recognize this? In the wake of the COVID crisis and ensuing Monetary/Fiscal stimulus, too many people with very little financial literacy or professional training took up day-trading of equities, options and crypto currencies as a hobby and eventual vocation. The prudent, cautious amongst us (Warren Buffett included) were seemingly left behind in the speculative frenzy that ensued in the summer of 2020. We’re often reminded to not confuse investing/trading luck with skill. Regardless, many very young people made a lot of money in a very short period and thought that this process was somehow normal or even sustainable. To be perfectly clear: there was nothing normal about the Meme Stock frenzy, SPAC mania, or crypto and NFT bubble that erupted. When we witnessed trillion-dollar market caps such as Tesla and Nvidia trading like biotechs in the frenzy of Q4 of 2021, we decided we’d seen enough of this equity market mania. It was eerily reminiscent of Cisco, Lucent, Intel in 1999. The equity market today feels bloated and reckless; it’s probably a good time to start taking chips off the table and leave the party while people are still having fun. November 2021 was a harsh reminder that valuations and capital structures eventually do matter; people will learn the hard way. What are the most likely catalysts to set the market off moving lower? Nobody rings the bell at a market top, but negative catalysts include: -       inability to eradicate COVID in Europe & Asia will keep global trade and travel routes shut for another year -       cascade of lingering supply chain woes = potentially very recessionary -       debilitating energy price spikes in 2022-2023 = looming stagflation -       margin loan balances are at historically very high levels -       continuation of the Tech selloff we witnessed in Q4 2021 -       fraud & accounting malpractice (always prevalent in manias) -       Fed signaling significantly higher interest rates in the aftermath of inflation -       Geopolitics: a potential Kamala Harris Presidency would see Russia and China turn belligerent overnight What's your take on how we're handling Covid? You've mentioned what happened to our economy over the last 18 months was "economic terrorism". Will we learn - either through people revolting or negative consequences - or will we continue down this Orwellian path? It’s very disappointing to see how politicized the pandemic became in the United States. It obviously didn’t help that COVID struck in an Election year, but there will be plenty of blame to go around the table when a proper post-mortem analysis is conducted years from now. We hope that Bethany McLean (Enron: The Smartest Guys in the Room) will eventually write a thoroughly unbiased expose on the timeline of policy decisions in 2020. We’re of the firm belief that our Leaders in Washington D.C. did more harm than good in the early months of this pandemic. We can safely conclude the 2020 COVID shutdowns are the direct cause for the supply chain dislocations and hyperinflation that Americans are about to suffer. The shutdowns that we witnessed in the United States were a flawed policy decision akin to willful pilot error or ‘economic terrorism;’ Federal and State Governments suffocated millions of livelihoods and permanently destroyed hundreds of thousands of perfectly viable small & medium family-owned businesses. The larger, better capitalized multinational corporations capable of accessing capital markets and Government Stimulus Programs not only survived, they eventually thrived. What happened can only be described as a crime. Part 2 of this interview, where we discuss inflation, the Biden administration, why China banned crypto and more, can be found here. -- DISCLAIMER:  It should be assumed I or Rosemont Seneca has positions in any security or commodity mentioned in this article. None of this is a solicitation to buy or sell securities. Neither I nor RS hold licenses or are investing professional. None of this is financial advice. Positions can always change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.  Tyler Durden Tue, 11/30/2021 - 15:30.....»»

Category: blogSource: zerohedgeNov 30th, 2021

Student loans are a "lifetime sentence" that 66% of Black borrowers regret taking on

The student debt crisis disproportionately impacts Black borrowers, and The Education Trust found the debt has not benefitted them as it should. College graduate sitting outside. Sean de Burca/Getty Images The Education Trust released a survey examining the impacts of student debt on Black borrowers. It found 66% of them regret taking out a loan, deeming the debt "unpayable" and "not worth it." Student debt unevenly impacts Black borrowers, with many pushing for full student debt cancellation. The $1.7 trillion student debt crisis falls on the shoulders of 45 million Americans, but it disproportionately burdens Black borrowers. A new report found the majority of those borrowers wish they never took out a loan in the first place.The Education Trust, a nonprofit that advocates for student success, launched the National Black Student Loan Debt Study last year. They ran a nationwide survey of nearly 1,300 Black student-loan borrowers, mostly four-year degree holders making over $50,000 annually. The nonprofit released the results of the survey on Wednesday and found that 51% of the borrowers have yet to see positive returns on their debt, and 66% of them regret ever taking out loans, deeming them "unpayable" and "not worth it.""More than half of the Black borrowers in our study said they do not believe that student loans advance racial equality for Black borrowers (58%) or increase Black borrowers' ability to build wealth (61%)," the report noted, adding that many borrowers viewed their debt as a "lifetime sentence."The report also analyzed the impact of the income-driven repayment plan (IDR) on Black borrowers, which is supposed to set monthly payments for borrowers based on what is affordable for their incomes and family sizes, with any remaining student debt being forgiven after a set number of years in repayment.But, as the report noted, of the 2 million who became eligible for forgiveness under IDR plans in 2019, only 32 borrowers actually received it. The failures of IDR especially hurt Black borrowers - 72% of those surveyed were under the income-driven repayment plans. Of those surveyed borrowers, 71% of them said they had trouble affording a savings account, and 67% reported the loans having a negative impact on their mental health.Although the student-loan system was created with President Lyndon B. Johnson's goal to curb racial and income inequality in mind, the opposite ended up happening, placing the student debt burden disproportionately on communities of color.Insider has previously reported on this disproportionate burden. US Census data revealed in August that even if they didn't finish college, Black student-loan borrowers carry the same debt burden as a white adults with an advanced degree.Housing and Urban Development (HUD) Secretary Marcia Fudge told Axios in June that poor people and people of color hold a disproportionate amount of student debt, requiring reform. "Who has student debt? Poor people, Black people, brown people," Fudge said. "We're the people who carry most debt. And so the system's already skewed toward us not being creditworthy."That's why advocates and lawmakers are pushing for at least $50,000 in student debt cancellation to allow students to seek educations without being followed by debt for the rest of their lives. "Even during times of economic normalcy, student debt is a policy failure," Democrats wrote to Education Sec. Miguel Cardona earlier this month. "Turning student debt payments back on in the middle of a pandemic is an act of policy failure. Cancelling student debt is both the morally right and economically sound thing to do."Read the original article on Business Insider.....»»

Category: personnelSource: nytOct 20th, 2021

Here"s everything Biden has done so far to address the $1.7 trillion student debt crisis

From extending the student-loan payment pause to cancelling student debt for some borrowers, here's everything Biden has done on student debt to date. Shutterstock.com Since Biden took office, he's taken a number of actions to address the $1.7 trillion student-debt crisis. They include cancelling debt for borrowers with disabilities and extending the payment pause on loans. Democrats are pushing for him to cancel $50,000 in student debt per person, which the DOJ is reviewing. See more stories on Insider's business page. Forty-five million Americans have a $1.7 trillion student-debt burden in the country. And many of them, alongside Democrats and advocates, want President Joe Biden to forgive $50,000 of their debt.He hasn't done that yet, but the president has taken steps to lessen the burden and provide relief during the pandemic.As one of his first actions in office, Biden extended the pause on student-loan payments through September, coupled with zero growth in interest, to ensure borrowers suffering financially would not have to worry about paying off their loans. That is now running through January 2022.Since then, Education Secretary Miguel Cardona has cancelled billions in student debt for borrowers with disabilities and borrowers defrauded by for-profit schools. He's also started conducting reviews of student loan forgiveness programs that don't work as they should.But Democrats want Biden to do more.They have been keeping the pressure on the president to cancel $50,000 in student debt per person using his executive authority. Biden has expressed hesitancy to do so, and although he has asked the Education and Justice Departments to review his executive abilities to wipe out that debt, Democrats remain adamant that he can, and should, cancel student debt immediately with the flick of a pen."Student loan cancellation could occur today," Massachusetts Sen. Elizabeth Warren told Insider. "The president just needs to sign a piece of paper canceling that debt. It doesn't take any act of Congress or any amendment to the budget."Detailed below is everything Biden has done to date to confront the student debt crisis: Extended the pause on student-loan payments Evan Vucci/AP On his first day in office, Biden asked the Education Department to extend the pause on federal student loan payments through September 30, following Education Secretary Betsy DeVos' extension of it through the end of January 2020. This was accompanied by a 0% interest rate during that time period.National Economic Council Director Brian Deese said at the time that the extension would alleviate burdens on many households. "In this moment of economic hardship, we want to reduce the burden of these financial trade-offs," Deese said.This extension, however did not apply to the more than 7 million borrowers with loans held by private companies. In August, nearly two months before the pause was set to expire, Education Secretary Miguel Cardona announced the pause would be extended through January 31, 2022. This is the fourth extension of the pause during the pandemic, and Cardona said in a statement that it will be the "final" one."The payment pause has been a lifeline that allowed million of Americans to focus on their families, health, and finances  instead of student loans during the national emergency," Cardona said.The announcement of the extension was welcomed by many Democrats and advocacy groups who have been pushing for additional student debt relief for borrowers. Expanded the scope of the student loan payment pause Reuters/Andrew Burton Biden's payments pause on student loans initially only applied to borrowers with federal loans, meaning those with privately-held loans had to continue making payments during the pandemic.But on March 29, Cardona expanded the scope of that pause to apply to loans under the Federal Family Education Loan (FFEL) Program, which are privately held. This helped 1.14 million additional borrowers. The FFEL Program ended in 2010, but according to Education Department data, 11.2 million borrowers still have outstanding FFEL loans totaling over $248 billion. And while the department acquired some of the outstanding FFEL loans, many are still privately owned and were not affected by the earlier pause on federally owned student loan payments.According to a press release, any FFEL borrower who made a payment in the past year will have the option to request a refund.  Asked the Justice and Education Departments to review his authority to cancel student debt REUTERS / Jonathan Ernst At a CNN town hall in February, Biden said he doesn't have the executive authority to cancel up to $50,000 in student debt per person, but said he is prepared to cancel $10,000 — something he campaigned on. The same month, White House Press Secretary Jen Psaki told reporters that Biden will ask the Justice Department to review his legal authority to cancel $50,000 in student debt. Biden's administration has not yet commented on the status of the Justice Department's review.However, Insider reported that he has yet to deliver on that campaign promise, and while Biden said he would support legislation brought to him to cancel $10,000 in student debt, Democrats argue that legislation takes too long, and the president can cancel debt immediately using his executive authority."We have a lot on our plate, including moving to infrastructure and all kinds of other things," Warren said in a February press call. "I have legislation to do it, but to me, that's just not a reason to hold off. The president can do this, and I very much hope that he will."And White House Chief of Staff Ron Klain told Politico in April that Biden had asked Cardona to create a memo on the president's legal authority to forgive $50,000 in student loans per person.Biden will "look at that legal authority," Klain said. "He'll look at the policy issues around that, and he'll make a decision. He hasn't made a decision on that either way, and, in fact, he hasn't yet gotten the memos that he needs to start to focus on that decision." Reversed a DeVos methodology for determining loan forgiveness Secretary of Education Betsy DeVos. Alex Wong/Getty Images On March 18, Cardona reversed a Trump-era policy that gave only partial relief to defrauded students.The debt-cancellation methodology, known as the "borrower defense to repayment" — approved by Education Secretary Betsy DeVos — compared the median earnings of graduates with debt-relief claims to the median earnings of graduates in comparable programs. The bigger the difference, the more relief the applicant would receive.But compared to a 99.2% approval rate for defrauded claims filed under President Barack Obama, DeVos had a 99.4% denial rate for borrowers and ran up a huge backlog of claims from eligible defrauded borrowers seeking student debt forgiveness.Cardona said that process did not result in appropriate relief determination and needed to be reversed, and a judge recently ruled that DeVos must testify over why so few borrowers were approved for loan forgiveness. Cancelled student debt for some defrauded borrowers Nirat.pix/Getty Images So far, Cardona has cancelled over $2.6 billion in student debt for borrowers defrauded by for-profit schools.For-profit institutions that shut down years ago, such as Corinthian Colleges and ITT Technical Institutes, were accused of violating federal law by persuading their students to take out loans, and Cardona's new policy helped approximately 72,000 of those students receive $1 billion in loan cancellation in March."Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution's misconduct," Cardona said in a statement. "A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt."On June 16, Cardona cancelled student debt for 18,000 additional borrowers defrauded by ITT Technical Institutes, totaling to about $500 million in debt relief.The Education Department announced in a press release that 18,000 borrowers who attended ITT Tech will get 100% of their student debt forgiven, and the department will begin notifying borrowers of their approvals for loan forgiveness in the coming weeks and will work quickly to discharge those borrowers' loan balances."Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them," Cardona said in a statement.An additional 115,000 defrauded ITT borrowers got $1.1 billion in student debt relief on August 26, applicable for those who did not complete their degree and left ITT on or after March 31, 2008.And in the first time since 2017 that borrower defense claims have been approved for borrowers outside of ITT Tech, Corinthian Colleges, and American Career Institute, on July 9, Cardona cancelled student debt for 1,800 borrowers who attended the for-profit schools Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. Cancelled student debt for some borrowers with disabilities Getty Images / Dan Kitwood On March 29, Cardona cancelled $1.3 billion of student debt for about 41,000 borrowers with disabilities.He also waived an Obama-era requirement for those borrowers to submit documentation during a three-year monitoring period to verify that their incomes did not exceed the poverty line of $12,880 annually for a single person.A 2016 report from the Government Accountability Office found that 98% of reinstated disability discharges occurred because borrowers did not submit the required documentation — not because their incomes were too high."Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency," Cardona said in a statement. "Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork."But experts said this action did not make up for the significant number of borrowers who never received loan forgiveness simply due to paperwork."Today's announcement is not cause for celebration but rather for outrage," Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said in a statement at the time. "It is scandalous that the Department revoked the loan discharges for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic."Then, on August 19, Cardona wiped out student debt for 323,000 additional borrowers with disabilities, resulting in $5.8 billion in student-debt relief, and he "indefinitely" waived the requirement to provide proof of income."We've heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it," Cardona said. "This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support."Cardona also said the department will consider further waiving the three-year monitoring period. Started a review of student-loan forgiveness programs Suzanne Kreiter/The Boston Globe via Getty Images On May 24, the Education Department announced it is beginning the process of issuing new higher education regulations, mainly concerning student debt-forgiveness programs. The first step of the process will be through holding hearings in June to receive feedback on "regulations that would address gaps in postsecondary outcomes, such as retention, completion, student loan repayment, and loan default," according to a press release.The department will also seek comments on rules regarding student loan forgiveness for borrowers in public service and borrowers with disabilities, among other things.The main topics the department plans to address concern the methods for forgiving debt for defrauded borrowers and borrowers with disabilities, along with looking into the Public Service Loan Forgiveness (PSLF) program, which has rejected 98% of eligible borrowers. Forbes reported that the process to implement new rules could be lengthy, though. After the hearings in June, there will be "negotiated rulemaking," during which stakeholders meet with the department to review proposed regulations, and it could take a year or longer until changes are implemented. Biden's regulatory agenda also included plans to review loan forgiveness programs, but Insider reported on June 15 that details for those reviews remain unclear, and an Education Department spokesperson told Insider there is not yet a timeline for when improvements will be implemented.  Waived interest on student loans for service members Members of the United States Marine Corps stand listening to the 45th President Donald J. Trump's address of the crowd for the opening ceremony of the New York City 100th annual Veterans Day Parade and wreath-laying at the Eternal Light Flag Staff. Ira L. Black/Corbis via Getty Images The Education Department announced on August 20 that 47,000 former and active-duty service members will get the interest on their student loans retroactively waived.The relief will happen automatically, removing the requirement for service members to make individual requests to access the benefit, which, according to the press release, will make service members eight times more likely to receive the benefit than in 2019."Brave men and women in uniform serving our country can now focus on doing their jobs and coming home safely, not filling out more paperwork to access their hard-earned benefits," FSA Chief Operating Officer Richard Cordray said in a statement. "Federal Student Aid is grateful for our strong partnership with the Department of Defense, and we will seek to reduce red tape for service members wherever possible."Service members deployed to areas that qualify them for "imminent danger or hostile fire pay," according to the Higher Education Act, should not accrue interest on student loans that were first disbursed on or after October 1, 2008. But since the process was not previously automated, only a small proportion of eligible service members were able to access the benefit, with only about 4,800 of them getting relief in 2019. Overhauled a student-loan forgiveness program for public servants Andreas Rentz/Getty Images The Education Department on October 6 announced a major overhaul of the Public Service Loan Forgiveness (PSLF) program. It's supposed to wipe out student debt for public servants after 120 qualifying monthly payments, but to date it has rejected 98% of applicants due to deep flaws within the program.According to the department's press release, it will implement a limited-time waiver through October 31, 2022, that will allow borrowers to count payments from any federal loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.The department said this waiver alone would bring 550,000 borrowers closer to student-debt relief automatically, including 22,000 borrowers who will be immediately eligible for relief without any action on their part, totaling $1.74 billion in forgiveness. An additional 27,000 borrowers could also qualify for $2.82 billion in forgiveness if they certify additional periods of employment."Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," Education Secretary Miguel Cardona said in a statement. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."Other changes, to be rolled out in the next few months, include making payments easier to qualify for the program and reviewing denied applications and correcting errors. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 6th, 2021

David Stockman On The Banking Ponzi Scheme That"s Savaging Depositors

David Stockman On The Banking Ponzi Scheme That's Savaging Depositors Authored by David Stockman via InternationalMan.com, The toxic effects of the Fed’s relentless interest rate repression are many, but among the worst has been the absolute savaging of bank depositors. Interest rates on 12-month CDs (under $100,000) dropped below the inflation rate in October 2009 and have been pinned there ever since. There is no other word for this than “expropriation” — an unconstitutional taking of property from tens of millions of households that needed to keep their funds liquid and didn’t wish to roll the dice in the junk bond market or stocks. Worse still, the resulting vast transfer of income from depositors to banks has resulted in an egregious, artificial ballooning of bank profits and stock prices. For instance, the combined market cap of the top six US banking institution — JP Morgan, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — has risen from $200 billion at the bottom of the financial crisis during the winter of 2008-2009, where it reflected their true value absent government bailouts, to $1.5 trillion recently. That 7.5X gain, which was 100% orchestrated by the Fed, is an unspeakable gift to the wealthy who own most of the stocks and especially to top bank executives who have cashed-in on vastly appreciated options. Needless to say, this massive bubble in banks and other financial stocks is unsustainable. When the Fed is finally forced to shut down its printing presses, the bank stocks will be among the first to dive into the abyss. While this might represent condign justice from a policy and equitable point of view, the extent of the harm to everyday Americans cannot be gainsaid. That’s because Wall Street is going for one more bite at the apple, claiming that the currently accelerating rate of inflation is good for bank stocks. Consensus stock price forecasts for JPMorgan are up 20% by 2023 and for Goldman Sachs by 70%. Needless to say, this is just another 11th hour lure from big money speculators looking to unload vastly overvalued stocks on unwary retail investors. Accelerating inflation supposedly portends higher growth and loan demand, but that’s a complete humbug because what we actually see in the market is stagflation. And that will cap loan demand even as it squeezes net interest margins, causing bank earnings to fall big time. The impending demise of bank stocks is implicit in the manner in which the $1.5 trillion scam currently reflected in the bloated market cap of the Big Six institutions came about. The Fed dominates especially the front-end of the yield curve and will bring no interference from market forces — so the screaming injustice depicted below is its deliberate handiwork. On average, the after-inflation yield during the 11-year period was -1.40%. Inflation-Adjusted Net Interest Margin of Banks Versus Real Returns On One-Year CDs, 2009-2021 Upwards of one-fifth of the real wealth of depositors has been seized by Fed-enabled bankers during the last decade alone. We doubt whether a more perverse reverse Robinhood redistribution could be imagined. The Fed policy has literally turned everyday depositors (black bars) into the indentured financial serfs of the banking system (red bars). Cumulative Change in CD Rates, Total Bank Assets and Bank Net Interest Margin, 2009–2021 The chart above is indexed to Q4 2009 levels and shows that over the last 11-year period: CD yields fell by 75%; Bank net interest margins dropped by 19%; Total Bank assets soared by 79%. Needless to say, the above combination did wonders for bank profitability. On the one hand, the Fed’s money-pumping fostered an eruption of debt and other securities issuance. The aggregate balance sheets of the nation’s banks, therefore, expanded from $11.8 trillion to $21.1 trillion of total assets during the period. Even with lower interest rates and yields on these assets, total bank interest income rose from $545 billion in 2009 to $576 billion during the last twelve months period ending in March 2021. On the other hand, the rates banks paid depositors plunged by 50-75% depending upon deposit type and size. In a word, the nation’s bankers not only emerged unscathed from the Great Financial crisis owing to the Washington and Fed bailouts, but during the following decade surely believed they had died and gone to bankers’ heaven. For essentially doing nothing other than scooping up their share of the tsunami of corporate and government debt and collecting nearly cost-free deposits, the net margin of the banking system rose by $122 billion per annum or 30%. The chart below shows this ill-gotten profit gain on a quarterly basis. Eruption of Bank Net Interest Margin, 2009–2021 Not in a million years would this have happened under a regime of sound money and honest free market pricing in the money and capital markets. *  *  * The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now. Tyler Durden Mon, 10/04/2021 - 13:45.....»»

Category: blogSource: zerohedgeOct 4th, 2021

These 46 pitch decks helped fintechs disrupting trading, investing, and banking raise millions in funding

Looking for examples of real fintech pitch decks? Check out pitch decks that Qolo, Lance, and other startups used to raise money from VCs. Check out these pitch decks for examples of fintech founders sold their vision.Yulia Reznikov/Getty Images Insider has been tracking the next wave of hot new startups that are blending finance and tech.  Check out these pitch decks to see how fintech founders sold their vision. See more stories on Insider's business page. Fintech funding has been on a tear.In 2021, fintech funding hit a record $132 billion globally, according to CB Insights, more than double 2020's mark.Insider has been tracking the next wave of hot new startups that are blending finance and tech. Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You'll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding. New twists on digital bankingZach Bruhnke, cofounder and CEO of HMBradleyHMBradleyConsumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime, N26, and Varo have benefited from. The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model. "Our thesis going in was that we don't swipe our debit cards all that often, and we don't think the customer base that we're focusing on does either," Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. "A lot of our customer base uses credit cards on a daily basis."Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.Notably, the rate tiers are dependent on the percentage of savings, not the net amount. "We'll pay you more when you save more of what comes in," Bruhnke said. "We didn't want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us."Check out the 14-page pitch deck fintech HMBradley, a neobank offering interest rates as high as 3%, used to raise an $18.25 million Series APersonal finance is only a text awayYinon Ravid, the chief executive and cofounder of Albert.AlbertThe COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert's savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company. Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It's looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that's a pay-what-you-can model, between $4 and $14 a month. And Albert's now banking on a new tool to bring together its investing, savings, and budgeting tools.Fintech Albert used this 10-page pitch deck to raise a $100 million Series C from General Atlantic and CapitalG 'A bank for immigrants'Priyank Singh and Rohit Mittal are the cofounders of Stilt.StiltRohit Mittal remembers the difficulties he faced when he first arrived in the United States a decade ago as a master's student at Columbia University.As an immigrant from India, Mittal had no credit score in the US and had difficulty integrating into the financial system. Mittal even struggled to get approved to rent an apartment and couch-surfed until he found a roommate willing to offer him space in his apartment in the New York neighborhood Morningside Heights.That roommate was Priyank Singh, who would go on to become Mittal's cofounder when the two started Stilt, a financial-technology company designed to address the problems Mittal faced when he arrived in the US.Stilt, which calls itself "a bank for immigrants," does not require a social security number or credit history to access its offerings, including unsecured personal loans.Instead of relying on traditional metrics like a credit score, Stilt uses data such as education and employment to predict an individual's future income stability and cash flow before issuing a loan. Stilt has seen its loan volume grow by 500% in the past 12 months, and the startup has loaned to immigrants from 160 countries since its launch. Here are the 15 slides Stilt, which calls itself 'a bank for immigrants,' used to raise a $14 million Series AAn IRA for alternativesHenry Yoshida is the co-founder and CEO of retirement fintech startup Rocket Dollar.Rocket DollarFintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.Park West Asset Management led the round, with participation from investors including Hyphen Capital, which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken's venture arm. Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs' investment management division for an estimated $20 million.Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.Here's the 34-page pitch deck a fintech that helps users invest their retirement savings in crypto and real estate assets used to nab $8 millionA trading app for activismAntoine Argouges, CEO and founder of TulipshareTulipshareAn up-and-coming fintech is taking aim at some of the world's largest corporations by empowering retail investors to push for social and environmental change by pooling their shareholder rights.London-based Tulipshare lets individuals in the UK invest as little as one pound in publicly-traded company stocks. The upstart combines individuals' shareholder rights with other like-minded investors to advocate for environmental, social, and corporate governance change at firms like JPMorgan, Apple, and Amazon.The goal is to achieve a higher number of shares to maximize the number of votes that can be submitted at shareholder meetings. Already a regulated broker-dealer in the UK, Tulipshare recently applied for registration as a broker-dealer in the US. "If you ask your friends and family if they've ever voted on shareholder resolutions, the answer will probably be close to zero," CEO and founder Antoine Argouges told Insider. "I started Tulipshare to utilize shareholder rights to bring about positive corporate change that has an impact on people's lives and our planet — what's more powerful than money to change the system we live in?"Check out the 14-page pitch deck from Tulipshare, a trading app that lets users pool their shareholder votes for activism campaignsDigital tools for independent financial advisorsJason Wenk, founder and CEO of AltruistAltruistJason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he's running a company that is hoping to broaden access to financial advice for less-wealthy individuals. The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup's total funding to just under $67 million.Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an "all-in-one" platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. Here's the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and InsightRethinking debt collection Jason Saltzman, founder and CEO of ReliefReliefFor lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.  Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures. Relief's fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed roundHelping small banks lendTKCollateralEdgeFor large corporations with a track record of tapping the credit markets, taking out debt is a well-structured and clear process handled by the nation's biggest investment banks and teams of accountants. But smaller, middle-market companies — typically those with annual revenues ranging up to $1 billion — are typically served by regional and community banks that don't always have the capacity to adequately measure the risk of loans or price them competitively. Per the National Center for the Middle Market, 200,000 companies fall into this range, accounting for roughly 33% of US private sector GDP and employment.Dallas-based fintech CollateralEdge works with these banks — typically those with between $1 billion and $50 billion in assets — to help analyze and price slices of commercial and industrial loans that previously might have gone unserved by smaller lenders.On October 20th, CollateralEdge announced a $3.5 million seed round led by Dallas venture fund Perot Jain with participation from Kneeland Youngblood (a founder of the healthcare-focused private-equity firm Pharos Capital) and other individual investors.Here's the 10-page deck CollateralEdge, a fintech streamlining how small banks lend to businesses, used to raise a $3.5 million seed roundA new way to assess creditworthinessPinwheel founders Curtis Lee, Kurt Lin, and Anish Basu.PinwheelGrowing up, Kurt Lin never saw his father get frustrated. A "traditional, stoic figure," Lin said his father immigrated to the United States in the 1970s. Becoming part of the financial system proved even more difficult than assimilating into a new culture.Lin recalled visiting bank after bank with his father as a child, watching as his father's applications for a mortgage were denied due to his lack of credit history. "That was the first time in my life I really saw him crack," Lin told Insider. "The system doesn't work for a lot of people — including my dad," he added. Lin would find a solution to his father's problem years later while working with Anish Basu, and Curtis Lee on an automated health savings account. The trio realized the payroll data integrations they were working on could be the basis of a product that would help lenders work with consumers without strong credit histories."That's when the lightbulb hit," said Lin, Pinwheel's CEO.In 2018, Lin, Basu, and Lee founded Pinwheel, an application-programming interface that shares payroll data to help both fintechs and traditional lenders serve consumers with limited or poor credit, who have historically struggled to access financial products. Here's the 9-page deck that Pinwheel, a fintech helping lenders tap into payroll data to serve consumers with little to no credit, used to raise a $50 million Series BAn alternative auto lenderTricolorAn alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds. Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income. Half of Tricolor's customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households. "For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle," Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.An auto lender that caters to underbanked Hispanics used this 25-page deck to raise $90 million from BlackRock investors A new way to access credit The TomoCredit teamTomoCreditKristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history. Kim, who came to the US from South Korea, couldn't initially get access to credit despite having a job in investment banking after graduating college. "I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything," Kim told Insider. "Many young professionals like me, we deserve an opportunity to be considered but just because we didn't have a Fico, we weren't given a chance to even apply," she added.Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.TomoCredit, a fintech that lends to thin- and no-credit borrowers, used this 17-page pitch deck to raise its $10 million Series AHelping streamline how debts are repaidMethod Financial cofounders Jose Bethancourt and Marco del Carmen.Method FinancialWhen Jose Bethancourt graduated from the University of Texas at Austin in May 2019, he faced the same question that confronts over 43 million Americans: How would he repay his student loans?The problem led Bethancourt on a nearly two-year journey that culminated in the creation of a startup aimed at making it easier for consumers to more seamlessly pay off all kinds of debt.  Initially, Bethancourt and fellow UT grad Marco del Carmen built GradJoy, an app that helped users better understand how to manage student loan repayment and other financial habits. GradJoy was accepted into Y Combinator in the summer of 2019. But the duo quickly realized the real benefit to users would be helping them move money to make payments instead of simply offering recommendations."When we started GradJoy, we thought, 'Oh, we'll just give advice — we don't think people are comfortable with us touching their student loans,' and then we realized that people were saying, 'Hey, just move the money — if you think I should pay extra, then I'll pay extra.' So that's kind of the movement that we've seen, just, everybody's more comfortable with fintechs doing what's best for them," Bethancourt told Insider. Here is the 11-slide pitch deck Method Financial, a Y Combinator-backed fintech making debt repayment easier, used to raise $2.5 million in pre-seed fundingQuantum computing made easyQC Ware CEO Matt Johnson.QC WareEven though banks and hedge funds are still several years out from adding quantum computing to their tech arsenals, that hasn't stopped Wall Street giants from investing time and money into the emerging technology class. And momentum for QC Ware, a startup looking to cut the time and resources it takes to use quantum computing, is accelerating. The fintech secured a $25 million Series B on September 29 co-led by Koch Disruptive Technologies and Covestro with participation from D.E. Shaw, Citi, and Samsung Ventures.QC Ware, founded in 2014, builds quantum algorithms for the likes of Goldman Sachs (which led the fintech's Series A), Airbus, and BMW Group. The algorithms, which are effectively code bases that include quantum processing elements, can run on any of the four main public-cloud providers.Quantum computing allows companies to do complex calculations faster than traditional computers by using a form of physics that runs on quantum bits as opposed to the traditional 1s and 0s that computers use. This is especially helpful in banking for risk analytics or algorithmic trading, where executing calculations milliseconds faster than the competition can give firms a leg up. Here's the 20-page deck QC Ware, a fintech making quantum computing more accessible, used to raised its $25 million Series BSimplifying quant modelsKirat Singh and Mark Higgins, Beacon's cofounders.BeaconA fintech that helps financial institutions use quantitative models to streamline their businesses and improve risk management is catching the attention, and capital, of some of the country's biggest investment managers.Beacon Platform, founded in 2014, is a fintech that builds applications and tools to help banks, asset managers, and trading firms quickly integrate quantitative models that can help with analyzing risk, ensuring compliance, and improving operational efficiency. The company raised its Series C on Wednesday, scoring a $56 million investment led by Warburg Pincus with support from Blackstone Innovations Investments, PIMCO, and Global Atlantic. Blackstone, PIMCO, and Global Atlantic are also users of Beacon's tech, as are the Commonwealth Bank of Australia and Shell New Energies, a division of Royal Dutch Shell, among others.The fintech provides a shortcut for firms looking to use quantitative modelling and data science across various aspects of their businesses, a process that can often take considerable resources if done solo.Here's the 20-page pitch deck Beacon, a fintech helping Wall Street better analyze risk and data, used to raise $56 million from Warburg Pincus, Blackstone, and PIMCOSussing out bad actorsFrom left to right: Cofounders CTO David Movshovitz, CEO Doron Hendler, and chief architect Adi DeGaniRevealSecurityAn encounter with an impersonation hacker led Doron Hendler to found RevealSecurity, a Tel Aviv-based cybersecurity startup that monitors for insider threats.Two years ago, a woman impersonating an insurance-agency representative called Hendler and convinced him that he made a mistake with his recent health insurance policy upgrade. She got him to share his login information for his insurer's website, even getting him to give the one-time passcode sent to his phone. Once the hacker got what she needed, she disconnected the call, prompting Hendler to call back. When no one picked up the phone, he realized he had been conned.He immediately called his insurance company to check on his account. Nothing seemed out of place to the representative. But Hendler, who was previously a vice president of a software company, suspected something intangible could have been collected, so he reset his credentials."The chief of information security, who was on the call, he asked me, 'So, how do you want me to identify you? You gave your credentials; you gave your ID; you gave the one time password. How the hell can I identify that it's not you?' And I told him, 'But I never behave like this,'" Hendler recalled of the conversation.RevealSecurity, a Tel Aviv-based cyber startup that tracks user behavior for abnormalities, used this 27-page deck to raise its Series AA new data feed for bond tradingMark Lennihan/APFor years, the only way investors could figure out the going price of a corporate bond was calling up a dealer on the phone. The rise of electronic trading has streamlined that process, but data can still be hard to come by sometimes. A startup founded by a former Goldman Sachs exec has big plans to change that. BondCliQ is a fintech that provides a data feed of pre-trade pricing quotes for the corporate bond market. Founded by Chris White, the creator of Goldman Sachs' defunct corporate-bond-trading system, BondCliQ strives to bring transparency to a market that has traditionally kept such data close to the vest. Banks, which typically serve as the dealers of corporate bonds, have historically kept pre-trade quotes hidden from other dealers to maintain a competitive advantage.But tech advancements and the rise of electronic marketplaces have shifted power dynamics into the hands of buy-side firms, like hedge funds and asset managers. The investors are now able to get a fuller picture of the market by aggregating price quotes directly from dealers or via vendors.Here's the 9-page pitch deck that BondCliQ, a fintech looking to bring more data and transparency to bond trading, used to raise its Series AFraud prevention for lenders and insurersFiordaliso/Getty ImagesOnboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.But preventing fraud is also a priority, and that's where Neuro-ID comes in. The startup analyzes what it calls "digital body language," or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It's built for banks, lenders, insurers, and e-commerce players."The train has left the station for digital transformation, but there's a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy," Neuro-ID CEO Jack Alton told Insider.Founded in 2014, the startup's pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless. In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.Here's the 11-slide pitch deck a startup that analyzes consumers' digital behavior to fight fraud used to raise a $7 million Series AAI-powered tools to spot phony online reviews FakespotMarketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.That's where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart."There are promotional reviews written by humans and bot-generated reviews written by robots or review farms," Fakespot founder and CEO Saoud Khalifah told Insider. "Our AI system has been built to detect both categories with very high accuracy."Fakespot's AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series AHelping fintechs manage dataProper Finance co-founders Travis Gibson (left) and Kyle MaloneyProper FinanceAs the flow of data becomes evermore crucial for fintechs, from the strappy startup to the established powerhouse, a thorny issue in the back office is becoming increasingly complex.Even though fintechs are known for their sleek front ends, the back end is often quite the opposite. Behind that streamlined interface can be a mosaic of different partner integrations — be it with banks, payments players and networks, or software vendors — with a channel of data running between them. Two people who know that better than the average are Kyle Maloney and Travis Gibson, two former employees of Marqeta, a fintech that provides other fintechs with payments processing and card issuance. "Take an established neobank for example. They'll likely have one or two card issuers, two to three bank partners, ACH processing for direct deposits and payouts, mobile check deposits, peer-to-peer payments, and lending," Gibson told Insider. Here's the 12-page pitch deck a startup helping fintechs manage their data used to score a $4.3 million seed from investors like Redpoint Ventures and Y CombinatorE-commerce focused business bankingMichael Rangel, cofounder and CEO, and Tyler McIntyre, cofounder and CTO of Novo.Kristelle Boulos PhotographyBusiness banking is a hot market in fintech. And it seems investors can't get enough.Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami. Here's the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series AShopify for embedded financeProductfy CEO and founder, Duy VoProductfyProductfy is looking to break into embedded finance by becoming the Shopify of back-end banking services.Embedded finance — integrating banking services in non-financial settings — has taken hold in the e-commerce world. But Productfy is going after a different kind of customer in churches, universities, and nonprofits.The San Jose, Calif.-based upstart aims to help non-finance companies offer their own banking products. Productfy can help customers launch finance features in as little as a week and without additional engineering resources or background knowledge of banking compliance or legal requirements, Productfy founder and CEO Duy Vo told Insider. "You don't need an engineer to stand up Shopify, right? You can be someone who's just creating art and you can use Shopify to build your own online store," Vo said, adding that Productfy is looking to take that user experience and replicate it for banking services.Here's the 15-page pitch deck Productfy, a fintech looking to be the Shopify of embedded finance, used to nab a $16 million Series ADeploying algorithms and automation to small-business financingJustin Straight and Bernard Worthy, LoanWell co-foundersLoanWellBernard Worthy and Justin Straight, the founders of LoanWell, want to break down barriers to financing for small and medium-size businesses — and they've got algorithms and automation in their tech arsenals that they hope will do it.Worthy, the company's CEO, and Straight, its chief operating and financial officer, are powering community-focused lenders to fill a gap in the SMB financing world by boosting access to loans under $100,000. And the upstart is known for catching the attention, and dollars, of mission-driven investors. LoanWell closed a $3 million seed financing round in December led by Impact America Fund with participation from SoftBank's SB Opportunity Fund and Collab Capital.LoanWell automates the financing process — from underwriting and origination, to money movement and servicing — which shaves down an up-to-90-day process to 30 days or even same-day with some LoanWell lenders, Worthy said. SMBs rely on these loans to process quickly after two years of financial uncertainty. But the pandemic illustrated how time-consuming and expensive SMB financing can be, highlighted by efforts like the federal government's Paycheck Protection Program.Community banks, once the lifeline to capital for many local businesses, continue to shutter. And demands for smaller loan amounts remain largely unmet. More than half of business-loan applicants sought $100,000 or less, according to 2018 data from the Federal Reserve. But the average small-business bank loan was closer to six times that amount, according to the latest data from a now discontinued Federal Reserve survey.Here's the 14-page pitch deck LoanWell used to raise $3 million from investors like SoftBank.Branded cards for SMBsJennifer Glaspie-Lundstrom is the cofounder and CEO of Tandym.TandymJennifer Glaspie-Lundstrom is no stranger to the private-label credit-card business. As a former Capital One exec, she worked in both the card giant's co-brand partnerships division and its tech organization during her seven years at the company.Now, Glaspie-Lundstrom is hoping to use that experience to innovate a sector that was initially created in malls decades ago.Glaspie-Lundstrom is the cofounder and CEO of Tandym, which offers private-label digital credit cards to merchants. Store and private-label credit cards aren't a new concept, but Tandym is targeting small- and medium-sized merchants with less than $1 billion in annual revenue. Glaspie-Lundstrom said that group often struggles to offer private-label credit due to the expense of working with legacy players."What you have is this example of a very valuable product type that merchants love and their customers love, but a huge, untapped market that has heretofore been unserved, and so that's what we're doing with Tandym," Glaspi-Lundstrom told Insider.A former Capital One exec used this deck to raise $60 million for a startup helping SMBs launch their own branded credit cardsCatering to 'micro businesses'Stefanie Sample is the founder and CEO of FundidFundidStartups aiming to simplify the often-complex world of corporate cards have boomed in recent years.Business-finance management startup Brex was last valued at $12.3 billion after raising $300 million last year. Startup card provider Ramp announced an $8.1 billion valuation in March after growing its revenue nearly 10x in 2021. Divvy, a small business card provider, was acquired by Bill.com in May 2021 for approximately $2.5 billion.But despite how hot the market has gotten, Stefanie Sample said she ended up working in the space by accident. Sample is the founder and CEO of Fundid, a new fintech that provides credit and lending products to small businesses.This May, Fundid announced a $3.25 million seed round led by Nevcaut Ventures. Additional investors include the Artemis Fund and Builders and Backers. The funding announcement capped off the company's first year: Sample introduced the Fundid concept in April 2021, launched its website in May, and began raising capital in August."I never meant to do Fundid," Sample told Insider. "I never meant to do something that was venture-backed."Read the 12-page deck used by Fundid, a fintech offering credit and lending tools for 'micro businesses'Embedded payments for SMBsThe Highnote teamHighnoteBranded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty. The rise of embedded payments, or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards. The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.Here's the 12-page deck Highnote, a startup helping SMBs embed payments, used to raise $54 million in seed and Series A fundingSpeeding up loans for government contractors OppZo cofounders Warren Reed and Randy GarrettOppZoThe massive market for federal government contracts approached $700 billion in 2020, and it's likely to grow as spending accelerates amid an ongoing push for investment in the nation's infrastructure. Many of those dollars flow to small-and-medium sized businesses, even though larger corporations are awarded the bulk of contracts by volume. Of the roughly $680 billion in federal contracts awarded in 2020, roughly a quarter, according to federal guidelines, or some $146 billion that year, went to smaller businesses.But peeking under the hood of the procurement process, the cofounders of OppZo — Randy Garrett and Warren Reed — saw an opportunity to streamline how smaller-sized businesses can leverage those contracts to tap in to capital.  Securing a deal is "a government contractor's best day and their worst day," as Garrett, OppZo's president, likes to put it."At that point they need to pay vendors and hire folks to start the contract. And they may not get their first contract payment from the government for as long as 120 days," Reed, the startup's CEO,  told Insider. Check out the 12-page pitch deck OppZo, a fintech that has figured out how to speed up loans to small government contractors, used to raise $260 million in equity and debtHelping small businesses manage their taxesComplYant's founder Shiloh Jackson wants to help people be present in their bookkeeping.ComplYantAfter 14 years in tax accounting, Shiloh Johnson had formed a core philosophy around corporate accounting: everyone deserves to understand their business's money and business owners need to be present in their bookkeeping process.She wanted to help small businesses understand "this is why you need to do what you're doing and why you have to change the way you think about tax and be present in your bookkeeping process," she told Insider. The Los Angeles native wanted small businesses to not only understand business tax no matter their size but also to find the tools they needed to prepare their taxes in one spot. So Johnson developed a software platform that provides just that.The 13-page pitch deck ComplYant used to nab $4 million that details the tax startup's plan to be Turbotax, Quickbooks, and Xero rolled into one for small business ownersAutomating accounting ops for SMBsDecimal CEO Matt Tait.DecimalSmall- and medium-sized businesses can rely on any number of payroll, expense management, bill pay, and corporate-card startups promising to automate parts of their financial workflow. Smaller firms have adopted this corporate-financial software en masse, boosting growth throughout the pandemic for relatively new entrants like Ramp and massive, industry stalwarts like Intuit. But it's no easy task to connect all of those tools into one, seamless process. And while accounting operations might be far from where many startup founders want to focus their time, having efficient back-end finances does mean time — and capital — freed up to spend elsewhere. For Decimal CEO Matt Tait, there's ample opportunity in "the boring stuff you have to do to survive as a company," he told Insider. Launched in 2020, Decimal provides a back-end tech layer that small- and medium-sized businesses can use to integrate their accounting and business-management software tools in one place.On Wednesday, Decimal announced a $9 million seed fundraising round led by Minneapolis-based Arthur Ventures, alongside Service Providers Capital and other angel investors. See the 13-page pitch deck for Decimal, a startup automating accounting ops for small businessesInvoice financing for SMBsStacey Abrams and Lara Hodgson, Now co-foundersNowAbout a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain — but not in the traditional sense.Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business' cap, there was a hang-up."It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors," Hodgson told Insider. "Waiting to get paid was constraining our ability to grow."While it's not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession. Abrams and Hodgson couldn't secure a line of credit or use financing tools like factoring to solve their problem. The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.  "Why are we the ones borrowing money, when in fact we're the lender here because every time you send an invoice to a customer, you've essentially extended a free loan to that customer by letting them pay later," Hodgson said. "And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods," she added.Check out the 7-page deck that Now, Stacey Abrams' fintech that wants to help small businesses 'grow fearlessly', used to raise $29 millionCheckout made easyRyan Breslow.Ryan BreslowAmazon has long dominated e-commerce with its one-click checkout flows, offering easier ways for consumers to shop online than its small-business competitors.Bolt gives small merchants tools to offer the same easy checkouts so they can compete with the likes of Amazon.The startup raised its $393 million Series D to continue adding its one-click checkout feature to merchants' own websites in October.Bolt markets to merchants themselves. But a big part of Bolt's pitch is its growing network of consumers — currently over 5.6 million — that use its features across multiple Bolt merchant customers. Roughly 5% of Bolt's transactions were network-driven in May, meaning users that signed up for a Bolt account on another retailer's website used it elsewhere. The network effects were even more pronounced in verticals like furniture, where 49% of transactions were driven by the Bolt network."The network effect is now unleashed with Bolt in full fury, and that triggered the raise," Bolt's founder and CEO Ryan Breslow told Insider.Here's the 12-page deck that one-click checkout Bolt used to outline its network of 5.6 million consumers and raise its Series DPayments infrastructure for fintechsQolo CEO and co-founder Patricia MontesiQoloThree years ago, Patricia Montesi realized there was a disconnect in the payments world. "A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren't able to," Montesi, CEO and co-founder of Qolo, told Insider.Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments. "The way people were getting around that was that they were creating this spider web of fintech," she said, adding that "at the end of it all, they had this mess of suppliers and integrations and bank accounts."The 20-year payments veteran rounded up a group of three other co-founders — who together had more than a century of combined industry experience — to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.Here's the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series ABetter use of payroll dataAtomic's Head of Markets, Lindsay DavisAtomicEmployees at companies large and small know the importance — and limitations — of how firms manage their payrolls. A new crop of startups are building the API pipes that connect companies and their employees to offer a greater level of visibility and flexibility when it comes to payroll data and employee verification. On Thursday, one of those names, Atomic, announced a $40 million Series B fundraising round co-led by Mercato Partners and Greylock, alongside Core Innovation Capital, Portage, and ATX Capital. The round follows Atomic's Series A round announced in October, when the startup raised a $22 million Series A from investors including Core Innovation Capital, Portage, and Greylock.Payroll startup Atomic just raised a $40 million Series B. Here's an internal deck detailing the fintech's approach to the red-hot payments space.Saving on vendor invoicesHoward Katzenberg, Glean's CEO and cofounderGleanWhen it comes to high-flying tech startups, headlines and investors typically tend to focus on industry "disruption" and the total addressable market a company is hoping to reach. Expense cutting as a way to boost growth typically isn't part of the conversation early on, and finance teams are viewed as cost centers relative to sales teams. But one fast-growing area of business payments has turned its focus to managing those costs. Startups like Ramp and established names like Bill.com have made their name offering automated expense-management systems. Now, one new fintech competitor, Glean, is looking to take that further by offering both automated payment services and tailored line-item accounts-payable insights driven by machine-learning models. Glean's CFO and founder, Howard Katzenberg, told Insider that the genesis of Glean was driven by his own personal experience managing the finance teams of startups, including mortgage lender Better.com, which Katzenberg left in 2019, and online small-business lender OnDeck. "As a CFO of high-growth companies, I spent a lot of time focused on revenue and I had amazing dashboards in real time where I could see what is going on top of the funnel, what's going on with conversion rates, what's going on in terms of pricing and attrition," Katzenberg told Insider. See the 15-slide pitch deck Glean, a startup using machine learning to find savings in vendor invoices, used to raise $10.8 million in seed fundingReal-estate management made easyAgora founders Noam Kahan, CTO, Bar Mor, CEO, and Lior Dolinski, CPOAgoraFor alternative asset managers of any type, the operations underpinning sales and investor communications are a crucial but often overlooked part of the business. Fund managers love to make bets on markets, not coordinate hundreds of wire transfers to clients each quarter or organize customer-relationship-management databases.Within the $10.6 trillion global market for professionally managed real-estate investing, that's where Tel Aviv and New York-based startup Agora hopes to make its mark.Founded in 2019, Agora offers a set of back-office, investor relations, and sales software tools that real-estate investment managers can plug into their workflows. On Wednesday, Agora announced a $9 million seed round, led by Israel-based venture firm Aleph, with participation from River Park Ventures and Maccabee Ventures. The funding comes on the heels of an October 2020 pre-seed fund raise worth $890,000, in which Maccabee also participated.Here's the 15-slide pitch deck that Agora, a startup helping real-estate investors manage communications and sales with their clients, used to raise a $9 million seed roundAccess to commercial real-estate investing LEX Markets cofounders and co-CEOs Drew Sterrett and Jesse Daugherty.LEX MarketsDrew Sterrett was structuring real-estate deals while working in private equity when he realized the inefficiencies that existed in the market. Only high-net worth individuals or accredited investors could participate in commercial real-estate deals. If they ever wanted to leave a partnership or sell their stake in a property, it was difficult to find another investor to replace them. Owners also struggled to sell minority stakes in their properties and didn't have many good options to recapitalize an asset if necessary.In short, the market had a high barrier to entry despite the fact it didn't always have enough participants to get deals done quickly. "Most investors don't have access to high-quality commercial real-estate investments. How do we have the oldest and largest asset class in the world and one of the largest wealth creators with no public and liquid market?" Sterrett told Insider. "It sort of seems like a no-brainer, and that this should have existed 50 or 60 years ago."This 15-page pitch deck helped LEX Markets, a startup making investing in commercial real estate more accessible, raise $15 millionInsurance goes digitalJamie Hale, CEO and cofounder of LadderLadderFintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market. And while verticals like auto, homeowner's, and renter's insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market. Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion, compared to $144 billion for auto policies and $97 billion for homeowner's insurance.Here's the 12-page deck that Ladder, a startup disrupting the 'crown jewel' of the insurance market, used to nab $100 millionData science for commercial insuranceTanner Hackett, founder and CEO of CounterpartCounterpartThere's been no shortage of funds flowing into insurance-technology companies over the past few years. Private-market funding to insurtechs soared to $15.4 billion in 2021, a 90% increase compared to 2020. Some of the most well-known consumer insurtech names — from Oscar (which focuses on health insurance) to Metromile (which focuses on auto) — launched on the public markets last year, only to fall over time or be acquired as investors questioned the sustainability of their business models. In the commercial arena, however, the head of one insurtech company thinks there is still room to grow — especially for those catering to small businesses operating in an entirely new, pandemic-defined environment. "The bigger opportunity is in commercial lines," Tanner Hackett, the CEO of management liability insurer Counterpart, told Insider."Everywhere I poke, I'm like, 'Oh my goodness, we're still in 1.0, and all the other businesses I've built were on version three.' Insurance is still in 1.0, still managing from spreadsheets and PDFs," added Hackett, who also previously co-founded Button, which focuses on mobile marketing. See the 8-page pitch deck Counterpart, a startup disrupting commercial insurance with data science, used to raise a $30 million Series BSmarter insurance for multifamily propertiesItai Ben-Zaken, cofounder and CEO of Honeycomb.HoneycombA veteran of the online-insurance world is looking to revolutionize the way the industry prices risk for commercial properties with the help of artificial intelligence.Insurance companies typically send inspectors to properties before issuing policies to better understand how the building is maintained and identify potential risks or issues with it. It's a process that can be time-consuming, expensive, and inefficient, making it hard to justify for smaller commercial properties, like apartment and condo buildings.Insurtech Honeycomb is looking to fix that by using AI to analyze a combination of third-party data and photos submitted by customers through the startup's app to quickly identify any potential risks at a property and more accurately price policies."That whole physical inspection thing had really good things in it, but it wasn't really something that is scalable and, it's also expensive," Itai Ben-Zaken, Honeycomb's cofounder and CEO, told Insider. "The best way to see a property right now is Google street view. Google street view is usually two years old."Here's the 10-page Series A pitch deck used by Honeycomb, a startup that wants to revolutionize the $26 billion market for multifamily property insuranceHelping freelancers with their taxesJaideep Singh is the CEO and co-founder of FlyFin, an AI-driven tax preparation software program for freelancers.FlyFinSome people, particularly those with families or freelancing businesses, spend days searching for receipts for tax season, making tax preparation a time consuming and, at times, taxing experience. That's why in 2020 Jaideep Singh founded FlyFin, an artificial-intelligence tax preparation program for freelancers that helps people, as he puts it, "fly through their finances." FlyFin is set up to connect to a person's bank accounts, allowing the AI program to help users monitor for certain expenses that can be claimed on their taxes like business expenditures, the interest on mortgages, property taxes, or whatever else that might apply. "For most individuals, people have expenses distributed over multiple financial institutions. So we built an AI platform that is able to look at expenses, understand the individual, understand your profession, understand the freelance population at large, and start the categorization," Singh told Insider.Check out the 7-page pitch deck a startup helping freelancers manage their taxes used to nab $8 million in fundingDigital banking for freelancersJGalione/Getty ImagesLance is a new digital bank hoping to simplify the life of those workers by offering what it calls an "active" approach to business banking. "We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it," Lance cofounder and CEO Oona Rokyta told Insider. Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that's connected to automated tax withholdings.In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.Here's the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including BarclaysSoftware for managing freelancersWorksome cofounder and CEO Morten Petersen.WorksomeThe way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risør.Here's the 21-slide pitch deck used by a startup that helps firms like Carlsberg and Deloitte manage freelancersPayments and operations support HoneyBook cofounders Dror Shimoni, Oz Alon, and Naama Alon.HoneyBookWhile countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork. HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup's startup investment arm that also backs fintech robo-advisor Betterment, participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company's fundraising total to $227 million to date.Here's the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger GlobalPay-as-you-go compliance for banks, fintechs, and crypto startupsNeepa Patel, Themis' founder and CEOThemisWhen Themis founder and CEO Neepa Patel set out to build a new compliance tool for banks, fintech startups, and crypto companies, she tapped into her own experience managing risk at some of the nation's biggest financial firms. Having worked as a bank regulator at the Office of the Comptroller of the Currency and in compliance at Morgan Stanley, Deutsche Bank, and the enterprise blockchain company R3, Patel was well-placed to assess the shortcomings in financial compliance software. But Patel, who left the corporate world to begin work on Themis in 2020, drew on more than just her own experience and frustrations to build the startup."It's not just me building a tool based on my personal pain points. I reached out to regulators. I reached out to bank compliance officers and members in the fintech community just to make sure that we're building it exactly how they do their work," Patel told Insider. "That was the biggest problem: No one built a tool that was reflective of how people do their work."Check out the 9-page pitch deck Themis, which offers pay-as-you-go compliance for banks, fintechs, and crypto startups, used to raise $9 million in seed fundingConnecting startups and investorsHum Capital cofounder and CEO Blair SilverbergHum CapitalBlair Silverberg is no stranger to fundraising.For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups."I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they're meeting a ton of investors, and the investors are all asking the same questions," Silverberg told Insider. He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech. This 11-page pitch deck helped Hum Capital, a fintech using AI to match investors with startups, raise a $9 million Series A.Helping LatAm startups get up to speedKamino cofounders Gut Fragoso, Rodrigo Perenha, Benjamin Gleason, and Gonzalo ParejoKaminoThere's more venture capital flowing into Latin America than ever before, but getting the funds in founders' hands is not exactly a simple process.In 2021, investors funneled $15.3 billion into Latin American companies, more than tripling the previous record of $4.9 billion in 2019. Fintech and e-commerce sectors drove funding, accounting for 39% and 25% of total funding, respectively.  However, for many startup founders in the region who have successfully sold their ideas and gotten investors on board, there's a patchwork of corporate structuring that's needed to access the funds, according to Benjamin Gleason, who was the chief financial officer at Groupon LatAm prior to cofounding Brazil-based fintech Kamino.It's a process Gleason and his three fellow Kamino cofounders have been through before as entrepreneurs and startup execs themselves. Most often, startups have to set up offshore financial accounts outside of Brazil, which "entails creating a Cayman [Islands] holding company, a Delaware LLC, and then connecting it to a local entity here and also opening US bank accounts for the Cayman entity, which is not trivial from a KYC perspective," said Gleason, who founded open-banking fintech Guiabolso in Sao Paulo. His partner, Gonzalo Parejo, experienced the same toils when he founded insurtech Bidu."Pretty much any international investor will usually ask for that," Gleason said, adding that investors typically cite liability issues."It's just a massive amount of bureaucracy, complexity, a lot of time from the founders. All of this just to get the money from the investor that wants to give them the money," he added.Here's the 8-page pitch deck Kamino, a fintech helping LatAm startups with everything from financing to corporate credit cards, used to raise a $6.1M pre-seed roundThe back-end tech for beautyDanielle Cohen-Shohet, CEO and founder of GlossGeniusGlossGeniusDanielle Cohen-Shohet might have started as a Goldman Sachs investment analyst, but at her core she was always a coder.After about three years at Goldman Sachs, Cohen-Shohet left the world of traditional finance to code her way into starting her own company in 2016. "There was a period of time where I did nothing, but eat, sleep, and code for a few weeks," Cohen-Shohet told Insider. Her technical edge and knowledge of the point-of-sale payment space led her to launch a software company focused on providing behind-the-scenes tech for beauty and wellness small businesses.Cohen-Shohet launched GlossGenius in 2017 to provide payments tech for hair stylists, nail technicians, blow-out bars, and other small businesses in the space.Here's the 11-page deck GlossGenius, a startup that provides back-end tech for the beauty industry, used to raise $16 millionRead the original article on Business Insider.....»»

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