Solving the Debt Crisis the American Way

On Friday, Jan. 13, Treasury Secretary Janet Yellen wrote to Congress that the U.S. government will hit its borrowing limit on Jan. 19, forcing the new Congress into negotiations over the debt limit much sooner than expected. She said she will use accounting maneuvers she called “extraordinary measures” to keep U.S. finances running for a few months, pushing the potential date for default to sometime in the summer. But she urged Congress to get to work on raising the debt ceiling.

Lifting it above its current $31.385 trillion limit won’t be easy with a highly divided and gridlocked Congress. As former Republican politician David Stockman crowed in a Jan. 11 article:

15 [House] votes and the slings and arrows of MSM opprobrium were well worth it. That’s because the GOP’s anti-McCarthy insurrection obtained concessions which just might slow America’s headlong rush to fiscal armageddon. And just in the nick of time!

We are referring, of course, to the Speaker elect’s promise that there will be no more debt ceiling increases without off-setting spending cuts; and that in the event of a double-cross a single Member of the House may table a motion to vacate the Speaker’s chair.

Even if Congress succeeds in raising the debt ceiling, the Federal Reserve’s aggressive interest rate hikes are likely to push interest on the federal debt to unsustainable

— source | Ellen Brown | Jan 20, 2023

Nullius in verba


Banks Recover only 13% of Rs 10 Lakh Crore Loans Written off in Last 5 Years

Banks have recovered only 13% of a staggering amount of loans worth more than Rs 10 lakh crore loans written off in the last five years.

According to a right-to-information request filed by The Indian Express with the Reserve Bank of India (RBI), banks were able to recover just Rs 1,32,036 crore by writing off debts in the last five years. The write-off helped banks reduce their non-performing assets (NPAs) by Rs 10,09,510 crore.

The mega write-off, which would have been enough to eliminate 61% of the projected gross fiscal deficit of Rs 16.61 lakh crore for 2022–23, reduced NPAs to Rs 7,29,388 crore as of March 2022, the RTI revealed. According to the RBI, write-offs reduced NPAs by Rs 13,22,309 crore in the last 10 years.

— source | 21 Nov 2022

Nullius in verba

1 in 3 of World’s Poorest Countries Spend More on Debt Repayments Than Education

A report published this week by Save the Children revealed that 1 in 3 of the world’s poorest nations spend more on paying off debt to wealthy countries and investors than on educating its own children.

The U.K.-based charity’s report—entitled Fixing a Broken System: Transforming Education Financing—shows that 21 out of 70 low- and lower-middle-income countries with available data spent more on external debt repayment than on education in 2020. According to the publication, interest payments are expected to account for an average of 10% of the annual budget in this category of countries by 2024, up from 7% in 2015.

Meanwhile, nearly 1 in 3 children in low-income countries still do not finish primary school.

— source | Oct 12, 2022

Nullius in verba

The Origin of Student Debt

With the vociferous debate over President Joe Biden’s announcement that the federal government will cancel a portion of outstanding student debt, it’s important to understand how Americans came to owe the current cumulative total of more than $1.6 trillion for higher education.

In 1970, Ronald Reagan was running for reelection as governor of California. He had first won in 1966 with confrontational rhetoric toward the University of California public college system and executed confrontational policies when in office. In May 1970, Reagan had shut down all 28 UC and Cal State campuses in the midst of student protests against the Vietnam War and the U.S. bombing of Cambodia. On October 29, less than a week before the election, his education adviser Roger A. Freeman spoke at a press conference to defend him.

Freeman’s remarks were reported the next day in the San Francisco Chronicle under the headline “Professor Sees Peril in Education.” According to the Chronicle article, Freeman

— source | Jon Schwarz | Aug 25 2022

Nullius in verba

88% of Over 9,000 Punjab Farmers Who Died by Suicide in 18 Years Were Debt-Ridden

As many as 9,291 farmers died by suicide between 2000 and 2018 in six districts of Punjab, a Panjab Agriculture University (PAU) study published in the latest edition of Economic and Political Weekly has revealed.

The districts surveyed were Sangrur, Bathinda, Ludhiana, Mansa, Moga and Barnala.

Heavy debt – most incurred against loans from non-institutional sources – was stated as the prime driving factor in 88% of these cases, the study has found.

Marginal and small farmers were the chief victims – 77% of famers who died by suicide owned fewer than two hectares of land, the study said.

The field survey also revealed that around 93% of the affected households were of those where one death by suicide had occurred. In 7% of the families, there were two or more

— source | Vivek Gupta | 21/Jun/2022

Nullius in verba

A college debt history lesson no one tells

That nostalgic time of year for newly minted college grads and their professors has now concluded. I admit to being affected by the academic robes I pull out for commencement, not to mention the students I’ve taught for the past four years, who are finally ready to make the leap into the “real” world.

This spring was a bit different. It marked the 30th anniversary of my own graduation from college. And as I headed east for my reunion, I thought about how my daughter (a sophomore) and the rest of her millennial cohort have inherited a radically different academic world than the one I toasted with my friends from the Class of 1984. The changes — and they were dramatic — occurred on my generation’s watch, and were not just a series of unrelated misfortunes. On the contrary, the new world is the end product of a fiendishly successful conspiracy.

During my first semester of college, John Lennon was assassinated 40 blocks south of my freshman dorm, and Ronald Reagan, the former governor of California, was elected president of the United States. I was devastated by both of these events. At the time, I had no idea that the Great Communicator had cut his teeth on campus protests during the 1960s, using long-haired Berkeley students as perfect foils. Reagan assailed the Free Speech and antiwar movements, promising the taxpayers that if elected, he’d get college kids off

— source | Peter Lunenfeld | Jul 5, 2014

Nullius in verba