Economics

Last month, Moody's downgraded Ireland's debt stating "The main drivers for the downgrade are... the government's gradual but significant loss of financial strength, as reflected by the substantial increase in the debt-to-GDP ratio and weakening debt affordability.  Ireland's weakened growth prospects as a result of the severe downturn in the financial services and real estate sectors and an ongoing contraction in private sector credit".

We could easily swap out Ireland with U.S.   Think that it can't happen in good old U.S. of A.?  You might want to reconsider.

The Business Insider is running an article about the next top ten bubbles that are about to pop:

Our favorite bubble?  Numero Uno, Student Loans.  Funny how the government rigs it that when you borrow from them, you have to pay it back no matter what.  Kinda like taking out a loan from the mob.

In a hilarous article, The New York Times is reporting that Thomas Hoenig, the lone dissenter, states that current Fed policy risks the economy to another round of boom and bust.

“Monetary policy is a useful tool, but it cannot solve every problem faced by the United States,” Mr. Hoenig told local Chamber of Commerce members in a speech at the University of Nebraska, Lincoln. “In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long.”

A friend of mine recently asked me, "What's the most evil entity in the world?  Student loan debt."  Here is a guy that attended colinary school and racked up over 40k in studuent loans.  What most folks that take out. these loans don't realize is that they are with you for life, bankruptcy will do nothing at all to distinguish them.

According to the WallStreet Journal, student loan debt has now surpassed credit card debt.  This should hardly be surprising, given that tuition costs between 20-50k per year at a private institution, with students having little means to pay for the costs. 

The Financial Times is running an excellent article on the a long term (and permanent) solution to our problem of economic growth:

One of the biggest problems that led to the bubble was tax policy.  We more or less subsidized the bubble:

"Another option is to eliminate – or limit – Americans’ ability to reduce their taxable income by deducting mortgage interest payments. This has been criticized because it offers a strong incentive for people to buy homes even when they cannot afford them, which was one of the root causes of the financial crisis."

Bingo.  The government should have no involvement in the private sector to begin with.