Predict the Next Bubble

[DrPizza]

+2 student loans

we've got skyrocketing university costs, stagnant wages, and lagging unemployment (with drops being driven by people just dropping out of the work force, not job gains)... I don't see how it's sustainable.

Not sure how many people saw the post in Free Stuff yesterday - OpenStax College - an effort spearheaded by Rice University, supported by Bill&Melinda Gates Foundation, William&Flora Hewlett Foundation, etc.

High quality online textbooks - FREE. And, hundreds of universities starting to adopt them. There's absolutely no reason that a Calculus textbook should cost over $200. The textbook publishers who, "let's see, we'll change the preface a little bit, and rearrange the numbers in the homework sets, and call it a new edition, so students can't use the older additions" must be nervous about this.

 

[Scarpozzi]

Not sure how many people saw the post in Free Stuff yesterday - OpenStax College - an effort spearheaded by Rice University, supported by Bill&Melinda Gates Foundation, William&Flora Hewlett Foundation, etc.

High quality online textbooks - FREE. And, hundreds of universities starting to adopt them. There's absolutely no reason that a Calculus textbook should cost over $200. The textbook publishers who, "let's see, we'll change the preface a little bit, and rearrange the numbers in the homework sets, and call it a new edition, so students can't use the older additions" must be nervous about this.

That may be, but college debt isn't typically from just books. Tuition is skyrocketing because Universities are businesses and they are run like businesses. I don't agree with this, but the rule of thumb is: Grow, grow, grow. The more students you can get, the more tuition, the more money for projects/programs/etc... The downside is that the more you do, the more staff it takes and the more overhead you bear.

As time goes on, states are cutting budgets so state-funded institutions are giving less and less per student from taxes and the money provided by students to bear ridiculous waste of resources are paid directly by the student through fees and tuition.

If you take universities with multiple colleges/programs and drop the ones that aren't profitable and remove half of the IT infrastructure that's not required, you could save millions of dollars in overhead and useless staff. The problem is, most institutions don't want to shrink to save money and no one wants to step up to the plate and clean house because they won't be very popular if they do.

So liberal arts degrees even from public institutions can be $60k-100k for an undergrad....and for many, the grads will get jobs at Walmart and Subway and whoever else happens to be hiring because their degree in humanities can't get their foot in the door anywhere else.

 

[TheVrolok]

Are you a physician? I am assuming because of the 300k debt

congrats by the way

Yep. Thanks.

 

[videogames101]

Bitcoin ASICs.

It's already happening and it's pretty much an arms race to stay profitable.

CPU --> GPU --> FPGA --> ASIC --> ???

ASICs are generally the most efficient and highest performance implementation of digital logic design. You can design a better ASIC, but there isn't anything in terms of implementation which could yield higher performance.

 

[OverVolt]

Not sure how many people saw the post in Free Stuff yesterday - OpenStax College - an effort spearheaded by Rice University, supported by Bill&Melinda Gates Foundation, William&Flora Hewlett Foundation, etc.

High quality online textbooks - FREE. And, hundreds of universities starting to adopt them. There's absolutely no reason that a Calculus textbook should cost over $200. The textbook publishers who, "let's see, we'll change the preface a little bit, and rearrange the numbers in the homework sets, and call it a new edition, so students can't use the older additions" must be nervous about this.

The Bill and Melinda foundation is great, but a degree not backed by a brick and mortar college isn't going to have any prestige.

 

[OverVolt]

Who gives a shit what they are getting charged? Isn't that an indication of controlled credit policies and effective risk based pricing?

Isn't a "bubble" defined when people get *cheap* loans and the market doesn't effectively price risk?

As far as the other items mentioned:

1. <620 FICO scores as a % of all loans originated isn't anywhere near the peak and I don't see a huge trend in that direction.

2. 72 month loan terms have been in existence for more than 2 decades and didn't even go away during the subprime auto bust in the mid-90s. WA Original Term for most auto securitizations have increased a few months over the past several years, not a material effect.

3. Almost all large subprime auto finance companies max out at 72mo loans, including Americredit, Santander Consumer, and others.

4. LTVs have increased marginally and are higher than prime auto due to the prevalence of warranties.

5. Manheim index is still very high

6. Cars are lasting longer

7. Even during the credit crisis, when average balances were higher, loans written to subprime were higher, and LTVs were higher, auto loan losses were not high.


Why?

Because, by and large, people need their cars to go to work, or at least look for it. The utility of a car doesn't diminish in a more harsh economic environment. That is unlike almost all other loan classes.


Santelli is a blowhard who only looks skin deep at these issues. Overall credit metrics, including PTI/DTI are regressing to historical norms from very low crisis levels. Losses will increase but the market is far from a bubble.

You know if the models worked like they are supposed to then 2008 would've never happened. Thats my main gripe. Trillions of dollars on the line and obviously what we are doing is flawed in terms of pricing risk. Lehman was AAA days before it went bankrupt. Its so dumb it makes me laugh.

 

[Doppel]

I'd say college tuitions, but I know people are very slow to learn and the middle class isn't quite fucked enough yet that it's gotten to the point it says "no, hold on a moment" when given the option to mortgage the house and/or threaten retirement to cover a few years of darling daughter or son to get a toilet paper degree.

LegendKiller thanks for the student loan bubble synopsis.

There isn't a whole lot of growing awareness. Parents still encourage kids to "follow their dreams" and kids have no fucking clue what they are doing. 90% of them cannot even fathom what a monthly budget looks like let alone fitting $50k in student loans into it.

This is sadly true. Any doubts I may have had about its veracity have been quashed by my co-worker who's son is now in college learning art therapy.

The government is clearly a huge problem backstopping these bullshit loans for TPD (toilet paper degrees).

It's a serious under utilization of my skill set and I have the desire and ability to be a physician.

Also, though there is a "nursing shortage" now, it can change very quickly. The only unemployed doctors are those who are retired or lost their license because they were torturing their patients. It's an ultra-stable job. Still, apparently around half of physicians polled regret getting into medicine. I personally think it's not a fantastic career considering the gargantuan toll it takes on one's personal life.

The textbook publishers who, "let's see, we'll change the preface a little bit, and rearrange the numbers in the homework sets, and call it a new edition, so students can't use the older additions" must be nervous about this.

Good, they should while we're at it be marched to internment camps. It was a racket when I went to school.

 

[natto fire]

Not sure how many people saw the post in Free Stuff yesterday - OpenStax College - an effort spearheaded by Rice University, supported by Bill&Melinda Gates Foundation, William&Flora Hewlett Foundation, etc.

High quality online textbooks - FREE. And, hundreds of universities starting to adopt them. There's absolutely no reason that a Calculus textbook should cost over $200. The textbook publishers who, "let's see, we'll change the preface a little bit, and rearrange the numbers in the homework sets, and call it a new edition, so students can't use the older additions" must be nervous about this.

Nice Freudian slip for a math teacher.

I think book publishers see the writing on the wall and instead of trying to innovate for changing technologies, they are just squeezing more from their soon to be dwindling customers. The newsprint industry approach to technology.

My prediction for the next bubble can never be popped, unfortunately. It is opinionated people weighing in on something they have neither a stake in or knowledge of. Forums are a good breeding ground for this but FB and twitter do their share. There is nothing wrong with giving your opinion on anything, but when you try to sway others to your opinion by presenting fake facts, or just parrot your opinion over and over again, it just becomes disinformation and noise. Not fair to anyone who has yet to review the facts and develop their own opinion. 24 hour cable news is another source of this bubble.

 

[bigi]

Unions
Food Stamps and other 'assistance' crap
Medical Insurance
Student Loans
Corn and other useless 'foods'