More Than 1 Million New Defaulted Student Loans in 2016
At the end of last year, some 42.4 million Americans owed $1.3 trillion in federal direct student loans. The total number of defaulted federal direct loans rose by 1.1 million according to U.S. Department of Education data reported earlier this month by the Consumer Federation of America.
More than $137 billion (about 9.8%) of a total of $1.4 trillion in loan balances from both the federal direct loans and federal loans made by financial institutions are currently in default, which the federal government defines as being 270 days past due.
The average amount owed has risen from $26,300 at the end of 2013 to $30,650 at the end of last year. That is an increase of 17%, far higher than the inflation rate over the same period.
Rohit Chopra, senior fellow at the Consumer Federation of America and former student loan ombudsman at the federal Consumer Financial Protection Bureau (CFPB), said: 3,000 preventable student loan defaults each day in America is 3,000 too many. Our broken system works well for the student loan industry but is failing borrowers, taxpayers, and our economy.
Uber has had a terrible month. Can it recover?
Uber announced that it is suspending its autonomous vehicle program following a serious crash on the streets of Tempe, Ariz., involving one of the company’s self-driving Volvos, serving as the latest major setback to the beleaguered ride-hailing startup that has had a difficult several weeks.
From harassment allegations and reports of cocaine use on a company retreat to accusations of intellectual property theft and a string of departures by top-level executives, the period beginning mid-February may represent the beginning of the downward spiral for what was once one of the world’s most promising startups.
Beginning on February 19 when Susan Fowler, a former engineer for the company published a post on her website calling attention to the gender bias and sexual harassment she faced while working for Uber. In her post, she described in detail how her claims were dismissed and she was subsequently threatened with termination after she reported sexual harassment to Uber's human resources department.
While her allegations were immediately addressed by CEO Travis Kalanick, hiring the former US Attorney General Eric Holder to assist in the internal investigation, a report by the New York Times mere days later demonstrated her claims may not have been isolated.
John Williams-Trump Can Save US Dollar
Should We Pay Off $20 Trillion In National Debt By Selling Federal Assets?
Total US debt is closing in on $20 trillion but it appears as if President Trump may be considering a fire sale of government assets to pay it off. Not only would this lower or completely wipe out the entire US national debt but it would also simultaneously shrink the size of government by transferring a significant amount of federal land and assets to the private sector.
This was the subject of our recent interview with William Shughart, Senior Fellow at the Independent Institute and a former economist at the Federal Trade Commission, who was contacted by Trump’s team to assess the feasibility of this idea, including estimates of all federal assets.
We should take advantage of the fact that the US government is the wealthiest that’s ever existed on the face of the Earth to help pay down the national debt, Shughart stated.
If a program could be launched where some of the federal government’s estimated trillions of assets could be sold off to the private sector, we could raise funds virtually overnight to wipe out the national debt as it currently exists. “The basic idea is to begin a structured sale — a fire sale — of federal assets to raise the funds to pay off the national debt,” Shughart said.
One reason why retailers are struggling: Americans are tapped out
If you are wondering why US retailers are feeling a strain, look no further than the latest report from the Federal Reserve Bank of New York that stated 33 percent of Americans said they could not come up with $2,000 over the next 30 days if the need arose.
Many Americans do not have the means for emergencies or for a family member’s needs — like a quarter of a ObamaCare deductible, or even enough for 25 percent down payment on the average cost of a funeral — according to the New York Fed’s Consumer Credit Access Survey.
No matter how you look at it, average Americans are tapped out. There is one glimmer of hope in terms of the financial fragility: The study shows that since the election, there has been a modest uptick in the percentage of households that feel they could come up with the cash.
In October, 65.9 percent of households said they could get the cash. Today, it’s 67.2 percent. The report’s data also point to more Americans giving up on applying for credit — not even for credit cards or a mortgage, or even a personal line of credit often used for starting small businesses. The percentage of people in the study who indicated that they would likely apply for a minimum of one type of credit over the next 12 months fell from 27.8 percent in October to 26 percent, the lowest level on record in the study.
Millennials are breaking a lot of records: According a report from the Council of Economic Advisers, Millennials are the largest generation in the U.S., comprising about one-third of the population; the most diverse generation; and the most educated generation, with more than 60% of adult Millennials having attended college.
But Millennials are also setting a less-positive record when it comes to housing: This generation of 18- to 34-year-olds is more likely to be living with their parents than to be in any other living situation — such as cohabitation with a spouse or significant other, or living alone or with roommates — for the first time in more than 130 years.
ABODO’s analysis of U.S. Census data found that 34.1% of Millennials nationwide have yet to fly the coop. But why? To find out, we’ve taken a closer look at the 16 Metropolitan Statistical Areas (with a population of at least 1 million) that exceed the national average — some of which have nearly 45% still living with parents — to see who those Millennials are, and what is keeping them in the nest.
The 16 MSAs with the highest percentage of Millennials living at home are scattered all across the country. Number one is Miami-Fort Lauderdale-West Palm Beach, FL, where a whopping 44.8% of 18- to 34-year-olds live with their parents. Close behind are Riverside-San Bernardino-Ontario, CA, at 44.5%, and New York-Newark-Jersey City, at 43.8%. All three MSAs are located in states with a higher than average percentage of Millennials living at home. Miami-Fort-Lauderdale-West Palm Beach and Riverside-San Bernardino-Ontario each exceed their state’s percentages of 37.9% and 38.4%, respectively. New York-Newark-Jersey City’s percentage exceeds the New York state average (39.6%) but is actually below New Jersey’s state figure of 45.8%, which is the highest state figure by a wide margin of about 6 percentage points.
Amazon Is Exploring More Brick-And-Mortar Retail Concepts
A new report by the New York Times details an array of initiatives by Amazon to expand its footprint in brick-and-mortar retail. The stores would mostly feature products, such as groceries and appliances, that have proven persistently difficult to sell online.
Amazon is already moving forward on groceries in particular, and will soon open two Seattle outlets where shoppers can pick up orders made through AmazonFresh online. It aims to open up to five more of these pickup locations across the U.S. by next year. They could be a boost to the grocery delivery service, which sources told the Times has struggled to make a profit.
Another idea making the rounds is a larger Amazon grocery store in which shoppers could browse fresh produce and meat, while packaged goods could be assembled into orders by workers in an attached warehouse. The Times’ sources disagreed on whether that concept was still under development.
Also apparently in the early stages is an idea for an Amazon electronics store, modeled on Apple stores, that would feature Amazon’s own devices. Another concept is a home furnishings and appliance store that would feature augmented reality ‘showrooms’ to let shoppers both see products in person, and envision what they would look like at home.
They’re Baaack! And Why You Should Be Worried – Very Worried
Bubbles are easy to spot – pinpointing when they’ll pop – is quite another. I coined that phrase a while back which is nothing more than adding my own spin combining two very old catch phrases used by seasoned traders and investors. I use the word “seasoned” for a reason. Why?
Because they’re the ones that have been around (and been burned themselves) yet lived to trade, or invest, another day. Those who remained wedded (usually the novice or one who’s never experienced true volatility) to the more prominent and specious claims of “you can’t tell when you’re in a bubble” followed with “you can always get out in time” for the most part are long gone. i.e.,The bubble popped into the ether – along with their money.
Nowhere was this phenom more apparent than the real-estate boom of the early 2000’s, which followed the prior phenom only 10 years prior (e.g., the dot-com crash) that should have seared into people’s memory for millennia just how “bubbles” take shape – and the resulting financial devastation that happens rapidly once they’ve popped.
Guess what? (actually you already know) nobody seems too care. Yet, here’s something you may not know, but should: It’s all happening again, and in the same time frame. We are once again (you’re going to see that phrase a lot) hovering in and around the all-time highs in the “markets.”
Robots could take over 38% of U.S. jobs within about 15 years, report says
More than a third of U.S. jobs could be at “high risk” of automation by the early 2030s, a percentage that’s greater than in Britain, Germany and Japan, according to a report released Friday.
The analysis, by accounting and consulting firm PwC, emphasized that its estimates are based on the anticipated capabilities of robotics and artificial intelligence, and that the pace and direction of technological progress are “uncertain.”
It said that in the U.S., 38% of jobs could be at risk of automation, compared with 30% in Britain, 35% in Germany and 21% in Japan. The main reason is not that the U.S. has more jobs in sectors that are universally ripe for automation, the report says; rather, it’s that more U.S. jobs in certain sectors are potentially vulnerable than, say, British jobs in the same sectors.
For example, the report says the financial and insurance sector has much higher possibility of automation in the U.S. than in Britain. That’s because, it says, American finance workers are less educated than British ones.
Auto Industry Resorts to Biggest Incentives Ever Just to Slow the Decline in Sales
In a few days, automakers are going to report their new vehicle deliveries for March. TrueCar, Kelley Blue Book, and LMC Automotive are predicting total vehicle sales slightly above the flat-line compared to March a year ago, though sales were down year-over-year in both January and February.
TrueCar forecasts an increase of 0.2% year-over-year to 1.586 million new cars and light trucks, with retail deliveries (excluding fleet sales) growing 1% to 1.276 million units. J.D. Power and LMC Automotive said on Friday that they expect an increase of 1.9%, to 1.62 million units, with retails sales up 1%, boosted by record incentives.
If sales nevertheless fall, everyone will blame the winter storm that arrived in the winter – “unexpectedly” or something. And it is possible that sales might fall. There was no winter storm in February, which was one of the warmest Februaries on record. Yet, sales in February fell 1.1% year-over year. They edged down in January too. And sales in both months combined fell 1.4% from the same period a year ago.
It’s not like automakers haven’t been trying. They paid out record incentives to accomplish this feat of slowing down the sales decline. In February, the industry in the US shelled out on average $3,587 per vehicle in incentive spending, per TrueCar. It was the highest ever for a February.
Employers Will Cut Wages and Workers to Pay for Obamacare Premiums
DC Report: Thousands of City Jobs Will Be Lost as Minimum Wage Hike Goes Into Effect
Washington, D.C. will lose thousands of jobs as the district's plan to raise the minimum wage to $15 goes into effect, while the higher wages will primarily benefit workers in the surrounding suburbs, according to a new report by the city's chief financial officer.
D.C. Mayor Muriel Bowser spearheaded the effort for a $15 minimum wage, more than double the federal minimum wage of $7.25 an hour. Analysis by the city's Office of Revenue Analysis, however, says the plan could cost the district 2,500 jobs by 2026, the Washington Times reports.
The district's minimum wage is currently $11.50 an hour and each year will grow by 70 cents until it reaches $15 in three years. After 2020, the minimum wage will grow based on inflation. The report also states that suburbs in Maryland and Virginia will benefit from the wage hikes as more businesses move there.
Bowser's spokesman, Kevin Harris, defended the mayor's position. "The mayor still believes that raising the minimum wage was the right thing to do and a key component of the administration's efforts to create more inclusive prosperity for all residents," Harris told the Times.
Laid-off IT workers worry US is losing tech jobs to outsourcing
Sixty-three-year-old Bob Zhang is worried about the future of tech jobs in the U.S. Will the high-paying positions be a thing of the past? Zhang thinks it’s already starting to happen. He’s one of 79 IT workers from the University of California, San Francisco, who’ve been laid off. Tuesday was their last day on the job. To replace them, the school is outsourcing some of their work to an Indian firm.
“Usually, they outsource the low-paying jobs,” he said at a gathering outside a school building. “But now they use H-1B (visa) and use foreign workers to replace the high-paying jobs. This trend is dangerous.”
It was a sentiment shared among the laid-off IT workers, who’ve tried to push the school to save their positions, to no avail. Now they fear other publicly-funded universities will take the same approach, and replace U.S. employees with foreign workers.
It was a sentiment shared among the laid-off IT workers, who’ve tried to push the school to save their positions, to no avail. Now they fear other publicly-funded universities will take the same approach, and replace U.S. employees with foreign workers. The layoffs at the school have grabbed headlines, because it’s a rare instance of a publicly funded university outsourcing and offshoring IT work to an Indian firm, allegedly through the use of the federal H-1B visa program.
Samsung makes your wedding ring a payments plaything
Samsung, Smartlink and Ingenico have unveiled their “contactless companion platform” (CCP) to let people pay for things using anything they’re wearing — such as a watch or a wedding ring.
It has been built with a dual interface smart card chip for multiple applications and form factors. Users tap the wearable on an NFC card reader in the same way as a contactless credit card. Samsung says it provides digital cash to those that don’t have access to credit cards or bank accounts.
Jörg Suchy, associate director business development LSI, Samsung Semiconductor Europe, adds that it offers “contactless digital cash for everyone”. With CCP in place, a user can make digital cash payments via any enabled contactless device of their choice, such as a dedicated smart card, wristband, key fob, a mechanical watch or a smart ring.
Money top up can be done in an app (Android and iOS), PC and point of sale (POS) terminals. CCP can also combine digital cash payments with loyalty points, vouchers, travel cards and ticketing,
The Difficulties in Making US Manufacturing Great Again
Manufacturing needs a durable, strong infrastructure system in order to thrive. Factories need highways so trucks can deliver parts, supplies, and materials on time and without damage. Rail systems are necessary since they are the cheapest method for delivering parts and supplies in bulk. Manufacturing firms also need modern ports that can accommodate large cargo ships bringing raw materials and parts from around the world.
In places such as the Rust Belt, there is a lack of proper highways and rail systems, with landlocked states often far from ports. For factories in the Rust Belt states to thrive, highways must be updated or newly built. This means a massive undertaking to rebuild America’s infrastructure in a short time period if Trump wishes to fulfill his promises. Based on an estimate by the American Society of Civil Engineers, the repairing and building of all the roads, bridges, rail lines, energy systems, airports, water treatment plants, and hazardous waste facilities in the nation would cost $3.6 trillion by 2020.
This is a monumental, but necessary expenditure if American manufacturing is to see a renaissance. A Trump adviser, business professor Peter Navarro of the University of California-Irvine, estimates that for every $200 billion in additional funds spent on infrastructure projects will create $88 billion in additional wages and raise America’s gross domestic product by more than 1 percent.
But the financial problem arises in paying for it. Instead of tax increases, Trump proposed a series of tax credits to private investors and builders to accomplish the task. Trump contends that the funds lost to the Treasury Department by the tax credits would be replaced by increased personal income taxes that workers hired for the infrastructure projects would pay and by business taxes from construction firms. Either way, rebuilding the nation’s infrastructure will take at least a decade and cost trillions of dollars.
More schools switching to 4-day weeks: Good or bad idea?
Venezuela, Home to World's Largest Oil Reserves, Runs Out of Gasoline
Hundreds of Venezuelans found themselves stranded this week as the nation’s gasoline supply ran out at stations throughout the nation’s urban centers, a stunning development in an OPEC nation believed to boast the world’s largest oil reserves.
According to the newspaper El Nacional, one-third of Venezuela’s 24 states – Miranda, Aragua, Lara, Barinas, Anzoátegui, Nueva Esparta, Bolívar, and Monagas – have reported significant shortages in gasoline for sale in stations throughout their cities. Hundreds of cars have been stranded on long lines at gas stations or in the middle of streets on their way to gas stations, distorting traffic flows and generally preventing city traffic from flowing smoothly.
Venezuelans speaking to media outlets expressed confusion and frustration at their inability to find a properly stocked gas station. “I have been to four or five gas stations and it has been impossible to fill my car,” José Torres of Caracas told reporters after finally finding one open gas station.
“Yesterday, I went to three filling stations and I couldn’t fill my tank,” student Freddy Bautista said on Thursday. “I’ve been waiting 30 minutes here, and it seems like I’ll be able to fill up today,” he added, in front of a gas station in east Caracas.
U.S. Stores Are Too Big, Boring and Expensive
America is having a “retail moment” -- and it’s not a good one. It’s easy to blame all of the industry’s woes on Amazon, the online giant. There’s little doubt that the fifth-largest U.S. company by market cap has been disrupting traditional retailers (I promised myself I would not use the dreaded “B&M” cliche). But online is far from the only source of retail’s problems: The large chains, the malls they usually find themselves in, and even flagship urban stores have failed to adapt to rapidly changing consumer tastes. This lag has been readily apparent for more than a decade.
Note that this is not the product of hindsight; during the financial crisis, it was clear to me that “retail shopping will emerge from the recession with a much smaller footprint than before.” In 2010, I reiterated those views, observing that “the United States still has too large of a retail footprint -- 40 square feet of retail space for each person; that is the most per person in the world ... that needs to come down appreciably.”
My present views are even less optimistic. We are probably closer to the beginning of that transition than the end. This is a generational realignment in the way consumers spend their discretionary dollars, and the ramifications and economic dislocations are going to last for decades.
This year alone there will be several thousand store closings. Hold aside for a moment the debacle that is Sears/Kmart -- that has as much to do with complex financial engineering as anything else -- and consider the ongoing changes in retail sales trends.