*** VD 13 Commentary Thread ***

[Bene Futuis]

I'm eating a banana right now.

I have the exact same thing for breakfast pretty much every morning. A banana, some coffee, and a yogurt. Maybe two bananas if I'm feeling really dangerous.

[Bene Futuis]

Student loans should definitely be dischargeable in bankruptcy. The national student loan debt that has now blown past $1.6T far outpaces the moral hazard our country faces by permitting people to undo their contractual obligations to historically bad acting lenders. Bankruptcy is a very serious undertaking --- your credit is fucked, you can no longer pass many background checks, it affects your ability to obtain a security clearance, hell a bankruptcy can even threaten professional licensure. And, of course, you still need to qualify for bankruptcy in the first place. And second, you are quite limited in the assets that are exempt from bankruptcy (particularly limited if you're unfortunate to live in a red state, generally speaking). But the bottom line is that we want up-and-comers, in particular, to be actively participating in our economy. That is the single most important factor in all of this, imo.

[revo]

Bernie's tax plan would tank the stock market? Yeah, no way that's true. Your job aside, you're taking up the wrong mantle here, revo. This country had a tax on financial transactions until 1966 and tons of other countries have them, too. Investment costs would go up somewhat but surely more efficient trading would also result. And, really, fuck all the high transaction traders anyways. Our country is certainly no worse off if they don't exist at all, the parasites. What actually will happen with a transaction tax is that the financial schemers would just figure out a way around it, such as trading in options instead of stocks or doing more business overseas. By the way, Bernie's bill is not set at a 5% charge, it ranges from .0005 to .05 and taxes a variety of commodities and derivatives. And Wall Street did just fine tanking the market all on their shitty, greedy own back in 2008. By the way, the Securities and Exchange Commission is right as we speak funded through a tax on financial transactions. I don't buy the sky is falling stuff even one iota, honestly. The greatest impact would be on speculators and hedge fund operators and, again, fuck those guys anyway. Plus, all these kinds of bills have carve-outs for the lowest income folks who get the costs passed on to them by the bad actor Wall Street folks so the good guys don't have to bear the bad guys' burden.

Ha. That's true that there was a financial transaction tax up until 1966, but that's the financial stone ages, before mutual funds were prevalent and way before any deep discount brokerage firms existed. Back then, you had to have an account with a Merrill Lynch or similar firm, where your stockbroker would gladly pitch you a stock to buy with a $750 commission attached, so needless to say, trade volume way way lower and buying stocks was primarily for the upper class. And maybe there were a few mutual funds that existed, but no one really thought of them as much of anything and they certainly didn't have any market share whatsoever. Now, it costs as little as $4.95 to buy as much stock as you want.

It's like tariffs -- maybe the fund managers eat some of the higher cost initially, but over time, they'll just shift it to the consumer. A trading tax would be a serious impediment for mutual funds and ETFs, and there's just no two ways about that.

Student loans should definitely be dischargeable in bankruptcy. The national student loan debt that has now blown past $1.6T far outpaces the moral hazard our country faces by permitting people to undo their contractual obligations to historically bad acting lenders. Bankruptcy is a very serious undertaking --- your credit is fucked, you can no longer pass many background checks, it affects your ability to obtain a security clearance, hell a bankruptcy can even threaten professional licensure. And, of course, you still need to qualify for bankruptcy in the first place. And second, you are quite limited in the assets that are exempt from bankruptcy (particularly limited if you're unfortunate to live in a red state, generally speaking). But the bottom line is that we want up-and-comers, in particular, to be actively participating in our economy. That is the single most important factor in all of this, imo.

But as I mentioned in the other thread, why wouldn't all new graduates file for bankruptcy once they were done with school? They would likely meet the "means" test. It's true that their credit would be screwed for 7 years, and they would be hampered from getting credit cards, auto loans, maybe renting apartments, and many professional licenses, but that may be worth wiping $200k worth of loans off your record.

I'm all for finding some solution, because tuition costs are insane. Maybe finding some way to subsidize public colleges and universities to a greater extent, which may push private schools to lower their tuition. Rutgers costs $25k/year, Penn State $20k. If those were cut in half through subsidies, it would force private schools to cut lower as well since they wouldn't be as competitive.

[Bene Futuis]

Ha. That's true that there was a financial transaction tax up until 1966, but that's the financial stone ages, before mutual funds were prevalent and way before any deep discount brokerage firms existed. Back then, you had to have an account with a Merrill Lynch or similar firm, where your stockbroker would gladly pitch you a stock to buy with a $750 commission attached, so needless to say, trade volume way way lower and buying stocks was primarily for the upper class. And maybe there were a few mutual funds that existed, but no one really thought of them as much of anything and they certainly didn't have any market share whatsoever. Now, it costs as little as $4.95 to buy as much stock as you want.

It's like tariffs -- maybe the fund managers eat some of the higher cost initially, but over time, they'll just shift it to the consumer. A trading tax would be a serious impediment for mutual funds and ETFs, and there's just no two ways about that.

And what we have seen in the ensuing decades was an explosion of high volume trading but zero increase in efficiency, right? The studies show that an increase in transaction costs will result in an even bigger reduction in transactions themselves. Wall Street bears that burden wholly. It's not like a tariff, although I see what you're getting at. A tariff is a tax on an import or export. A transaction fee is not necessarily tied to a good or even a service. If high volume, zero value added traders are negatively affected then the opportunity is for the market to achieve efficiency. Sure, some of the cost of the tax will be passed on to consumers but not until after the brokerages and other financial institutions muscle the parasites out of the equation, right? More salient concerns, in my opinion, revolve around increased volatility and liquidity issues (the latter contributing to the former) that may result from a Bernie / Ellison tax.

[Bene Futuis]

But as I mentioned in the other thread, why wouldn't all new graduates file for bankruptcy once they were done with school? They would likely meet the "means" test. It's true that their credit would be screwed for 7 years, and they would be hampered from getting credit cards, auto loans, maybe renting apartments, and many professional licenses, but that may be worth wiping $200k worth of loans off your record.

I'm all for finding some solution, because tuition costs are insane. Maybe finding some way to subsidize public colleges and universities to a greater extent, which may push private schools to lower their tuition. Rutgers costs $25k/year, Penn State $20k. If those were cut in half through subsidies, it would force private schools to cut lower as well since they wouldn't be as competitive.

What's to stop people from maxing out all their credit cards and credit lines right now and filing bankruptcy? Is it only access to the credit market that prevents everyone from doing that? I don't think so.

The exemption of student loans from discharge in bankruptcy directly contributed to the skyrocketing tuitions. The 2005 bill only served to benefit risky lenders who are absolutely willing to far overextend credit to risky debtors. And why wouldn't they? That debt is forever, no matter what. There exists now a perverse incentive to lend as much as humanly possible to the very riskiest population. It's like predatory payday loans (which are usurious and should be illegal), but with volume of credit replacing exorbitant interest rates. If the student loan exemption was removed, and it definitely should be removed, then creditors would be forced to act responsibly. Borrowers would necessarily focus more on tuition costs. Over time schools would be forced to reduce tuition or get pushed out of the market. And, what's even more important, many many billions of the $1.6T outstanding would become economically productive. Instead, what we have now are millions of teenagers or early-20s people with unmanageable lodestones around their necks. Many of them will never get out from underneath the debt ever in their entire lifetime. Liberal bankruptcy policies are positively correlated with economic freedom and productivity, although having bankruptcy options as "insurance" will also over time increase the cost to consumers to participate in the credit market. Interestingly, it's Elizabeth Warren who is perhaps the preeminent scholar on this topic in the whole country.

[revo]

There’s nothing stopping someone from maxing out credit cards and declaring bankruptcy, although that amount would almost certainly be far lower than an undergrad or grad school tuition, and the type of bankruptcy would also almost certainly fall into Chapter 11 or 13, where they have to repay money back under a payment plan.

One tuition plan I was reading about that made sense was Julian Castro's, who said that borrowers shouldn't have to repay loans until they've reached 250% of the federal poverty level. That at least gets someone on their feet.

[heyelander]

Where's Johnny!?!?!

[heyelander]

Is it just me, or is the RJ clock running an hour behind?

been like that for a while. I think I complained about it at some point. If eld was a mod, shit like this wouldn't be happening.

[revo]

been like that for a while. I think I complained about it at some point. If eld was a mod, shit like this wouldn't be happening.

Hmmm....working perfectly fine for me.

[heyelander]

test

....

hmmm .... now it's fine for me ....

[Kevin Seitzer]

And also for me.

[johnnya24]

Where's Johnny!?!?!

Hey, wassup. How ya doin'?

[The Feral Slasher]

Hey, wassup. How ya doin'?

who are you ?

[Bene Futuis]

who are you ?

"Who's Johhny?" she said, and smiled in her special way.

[heyelander]

Hey, wassup. How ya doin'?

man, I've been stalking you on your twitch feed just trying to find you .... nothing important, just checking in.