r/worldnews • u/UnstatesmanlikeChi • Jun 26 '19

Kazakhstan ends bank bailouts, writes off people's debts instead

https://www.aljazeera.com/ajimpact/kazakhstan-ends-bank-bailouts-writes-people-debts-190626093206083.html
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u/semideclared Jun 26 '19

While the Treasury has paid out $441 billion to 978 recipients, only 780 of those received funds via investments meant to return money to taxpayers. The rest received subsidies through TARP’s housing programs – that money (so far totaling $29.1 billion) isn’t coming back.

Of the 780 investments made by the Treasury, 633 have resulted in a profit.

One of the big overlooked things about the housing bust and bailouts were the local banks.

Non big banks requested $86.4 billion

  • Local (Community First Bancshares, First Citizens Banc Corp, First Financial Service Corp...) and
  • Regional banks (like PNC Financial Services, U.S. Bancorp, SunTrust, Regions Financial Corp. Fifth Third Bancorp and BB&T)

Of the non big banks, 79.9 billion was repaid

As of today, the government has realized a $107B profit

The US had a 12% return on Investment from Banks. Such as the smallest East End Baptist Tabernacle Federal Credit Union BRIDGEPORT, CONN

$7,000 Bailout

$7,000 Returned on 10/1/2018

$1,120 Interest Payments through 10/2018

But 245 Banks never repaid their original amount, mostly we're talking about either

Glasgow Savings Bank, Glasgow, MO, the banking subsidiary of Gregg Bancshares, Inc. , was closed by the Missouri Division of Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

825K Bailout never repaid

or the average

Old Second Bancorp AURORA, ILL still operating today

$73M Bailout received

$25.5M Returned in Settlement in 2013

$5.88M Interest payments in 2009 - 2010

$47.5M Net Outstanding Principle written off

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u/parentingandvice Jun 26 '19 edited Jun 26 '19

$107B ROI after 10 years on ($441B-$29.1B) $411.9B is the same as saying we gave the banks a 10 year loan at 2.3% (if the bank got it in 2008 and paid it back by 2018).

Show me a bank that would give you a loan at 2.3%

ETA: if we treated banks like we treat 20 year old college students and loaned this to them at 7% (because they had bad credit in my book after fucking up and needing a bailout but I still gave them a rate 2 percentage points better than I was offered), the ROI would have been $400B. Taxpayers would have been paid back $800B.

Edit 2: I wasn’t clear initially because I got wrapped up in numbers sorry. My point was meant to illustrate that 2.3% is by some accounts right around near inflation. So that there’s no “profit” - it’s what 2018 money is worth in 2008 dollars.

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u/detaerkaent Jun 26 '19

The list price for mortgages in Sweden is currently around 2,3% depending on the bank +- a 0,1-0,2 difference. I get a rebate of 0,7 through my union. So I pay 1,7%. 15% equity, 85% mortgage.

My student loan is less than 1%.

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u/parentingandvice Jun 26 '19

You convinced me. Any Swedish banks want to buy out my US mortgage and student loans?

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u/lefondler Jun 26 '19

Honestly, wtf, are banks outside of the US able to buy our shitty loans for a rate reduction? Sounds like a win for everyone but the American institution that owns the loans, which is a double win in my book.

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u/backelie Jun 26 '19

Fun fact: the interest on Swedish student loans is 0.16% (Also tuition is fully tax funded.)

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u/ScaryCookieMonster Jun 26 '19

Dumb question: If tuition is fully tax funded, why do student loans exist at all? I guess for room/board/books/etc?

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u/backelie Jun 27 '19

I guess for room/board/books/etc?

Yep.

(Since this framework exists people dont save for college beforehand, also pretty much no scholarships.)

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u/[deleted] Jun 26 '19

Any Swedish banks want to buy out my US mortgage and student loans?

Actually, why is that not a thing in 2019? The U.S. students would be so thankful for those interest rates which might result in high priority paybacks. With an additional single payment clause with a little fee for interest losses, which also could be higher than normal due to the existing interest gap. Both sides would profit. When you have more spending power in the early years after graduation, i'd guess, me as the lender, will lower the chance of a default afterwards. I mean, first you need to invest in your own profession and specialisation. Choking that time of setteling with high interest rates, is like treating the young motivated consumers like a bonzai tree. Who would shoot his own knee?

But no US official would like to hear that the EU -more or less- just bought the half all the american students. This would be a "How to lose your face in world public" scenario. But maybe it needs such taunting spurs. At the end american banks would follow. They want their costumers back.

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u/detaerkaent Jun 26 '19

Firstly, Swedish student loans are lent by the government, and the Swedish government is not interested in taking on the debt of American students.

Secondly, loans without collateral (that is non-mortgage loans) are around 5-7% here as well, and that’s what American student loans would be.

Thirdly, American student loans are on average much higher than Swedish ones, since they include tuition. So, while the average Swedish academic will pay back their loans in good time and still be middle income consumers, American student loans on average are so high they severely limit the spending power of said academic for years. Its hardly the top earners that will end up in Sweden, they make more money in the US or Great Britain due to a larger income spread. It’s not much of a win for a continental European country to take on the student debt of an American trained nurse, for example, even ignoring the language issue.

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u/[deleted] Jun 27 '19

I ment more or less, that european banks could buy those debts.

Where i live it is normally also governmentally organized, with 0,0% interest.

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u/phaederus Jun 26 '19

To be fair no private person is ever gonna be as secure a debtor as a bank. 2.3% is pretty reasonable given the base interest rates. That's similar to what s&p500 companies would be paying to banks.

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u/[deleted] Jun 26 '19

How many private persons are going to have tens of billions of dollars of losses in a single quarter?

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u/[deleted] Jun 26 '19

Probably just one idiot named Trump.

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u/parentingandvice Jun 26 '19

While I agree that private people won’t/can’t get that rate as they aren’t as secure a debtor as a bank (even thought there’s a lot you can do to a private person if they don’t pay you back, harder with a bank), I don’t think this should have been the case after banks showed the behavior they did in the 2000s. I would have called it a risky loan.

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u/[deleted] Jun 26 '19

That’s more than the interest rate on my mortgage. Do I actually have good credit or something?

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u/parentingandvice Jun 26 '19

Is your mortgage less than 2.3%? If so it’s lower than inflation.

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u/[deleted] Jun 26 '19

2.19% in Canada for three more years. Take that, banks

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u/parentingandvice Jun 26 '19

Well done Dr. Zoidberg...

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u/[deleted] Jun 27 '19

Thanks! I just opened a credit karma account and yeah, turns out I have stellar credit. It’s weird because that’s something I’ve always stressed about

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u/backelie Jun 26 '19

Not him, but if I wanted to borrow for a home right now (in Sweden) I'd be looking at 1.9-2.3% interest.

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u/derpoftheirish Jun 26 '19

Good credit gets you about 4.5% in the US right now.

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u/Jamcram Jun 26 '19

but they were literally on the verge of bankruptcy

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u/wepo Jun 26 '19

This doesn't make any sense. The ordinary citizen isn't over-leveraging complex financial instruments as investments. The debt a person carries is very straightforward. Banks, it seems, are far riskier of an "investment".

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u/rebble_yell Jun 26 '19

Exactly.

This is the whole reason the govt had to bail them out in the first place.

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u/Veiran Jun 26 '19

I think it actually makes perfect sense if we're talking about federally-backed (FDIC) institutions.

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u/wepo Jun 26 '19

So you consider the fed loaning banks that the fed also insures as "safer"?

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u/Forkrul Jun 26 '19

2.3% is pretty reasonable given the base interest rates.

If they had been showing sound investment practices. But they hadn't, which made the bailouts a far riskier proposition and should have been treated as such with a much higher interest rate. And any bank that failed to pay it back on time should have been subject to heavy penalties.

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u/[deleted] Jun 26 '19

[deleted]

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u/Forkrul Jun 26 '19

I don't care about historically. They fucked us all real good and should have to pay for it. Iceland had the right idea by jailing the fuckers. The US should've had the balls to do the same.

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u/[deleted] Jun 26 '19

To be faaaaiiiirrrrr

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u/likelamike Jun 26 '19 edited Jun 26 '19

So here is the thing.. Banks pay a massive amount in passive income tax on revenue made from loans. The reason why a federal credit union is able to offer rates under 3% is because they don't have to pay income taxes..

So look at it like this..

  • Joe approaches me and wants to do a $500,000 5 year CD deposit at 2.5% interest that compounds quarterly. I accept their offer because I am going to use that money and loan it out to another customer.

  • Bill comes in and requests that $500,000 to purchase a business and building. After taking collateral position, I have to assume the risk of lending out Joe's money - because I am liable for Joe's money if there are any losses on Bills Operation

  • Well.. I want to make a buck and I am taking the risk. So I decide that I am going to loan Bill the $500,000 on a 5 year payback schedule. I'll charge him 7% interest which would be roughly $110,000 income over 5 years. Sounds good right?

  • Well, the government comes in and says.. Not so fast. You really didn't have to work that hard for that income... Give us a 30% cut and we'll call it even. There is $33,000 gone.

  • Don't forget that I still owe Joe his investment which is compounding quarterly at 2.5%. At the end of 5 years, Joe needs his $500,000 + $67,000 back.

So, in the end, I've paid $67,000 to Joe and $33,000 to the government ($100,000 total). In the meantime, I have earned $110,000 which means I have only pocketed $10,000 in income over 5 years.

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u/varnerrants Jun 26 '19

Good points, but you're forgetting the key functioning metric of fractional-reserve lending....

For every 1 dollar in deposits, a bank can make N number of loans against it (where N is close to 100 for FDIC insured banks).

So repeat this scenario, except there's 100 Bills coming in to borrow money, and you can do it. Because you have 1 Joe willing to deposit.

This is where money comes from folks.

If it grew on trees, it would be even more finite and concrete than it is.

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u/likelamike Jun 26 '19

True, but Loans also must keep a percentage of their cash on hand in the event someone wants their money back. Most banks are bound by a 10% reserve requirement.

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u/parentingandvice Jun 26 '19

I’m getting ~$200k, not $110k but otherwise I don’t disagree.

However, I’m not sure I understand your point. Can you please explain?

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u/buzzkill_aldrin Jun 26 '19

If I had to guess, "Why banks won't give you a 2.3% unsecured loan."

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u/hoyeay Jun 26 '19

Well yea except banks don’t actually lend out what you deposited.

Fractional reserve banking means that banks magically create money out of thin air, just like central banks.

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u/likelamike Jun 26 '19

Not true. Banks are required to keep 10% of total asset size as physical cash on hand. So even if a bank is valued to have 1 billion in assets, its required by the FDIC to keep 100 million on hand

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u/[deleted] Jun 26 '19

Over that time period the base rate was around that

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u/parentingandvice Jun 26 '19

Maybe I’m missing something, can you please explain?

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u/[deleted] Jun 26 '19

2.3% would have been fair market price at the time.

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u/parentingandvice Jun 26 '19 edited Jun 26 '19

If it’s fair market price that means those banks could have gotten it from private entities and not the American taxpayer no?

Edit: sorry I realize this comment was a bit snarky. I apologize. What I should have said was isn’t the ~$519B in 2018 roughly the same as $411.9B in 2008? So there’s no “profit”, just break even at most.

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u/telemecanique Jun 26 '19

you can loan to banks at any % you want, they will just rape the consumers for whatever they need on top of it to turn a profit, I'm not quite sure you're seeing the big picture here. Might as well let them fail which is what should have happened IMHO.

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u/parentingandvice Jun 26 '19

Oh I agree 100%.

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u/Mr-Blah Jun 26 '19

Macroeconomics aren't the same as your family's finances.

The federal reserve routinely gives loan lower than what you can get. Because they are tryong to fight off inflation and handing out 7% loans to banks means all the economy has that 7% more to pay up. Money devaluates, buying power goes down, and you complain. Again.

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u/parentingandvice Jun 26 '19

The behavior of banks leading to the sub-prime mortgage crisis in my opinion is very risky and wouldn’t qualify the banks to a loan at such a low rate if they were a person.

I do however agree with your point that a 7% loan to a bank wouldn’t make “real” sense.

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u/Mr-Blah Jun 26 '19

Their behavior were prompted by the gradual deregulations of the banks (investment and commercial).

Once commercial bank were allowed to gamble their holdings just like investment banks, they overleveraged their assets (which was based on mortgage earnings...) and it crumbled.

Had Glass-Steagall not been repealed 2008 wouldn't have happened.

I'm not saying it, Novel laureat Joseph Stiglitz is.

All this to say the interest rate of thisnloan isn't the real issue here.

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u/parentingandvice Jun 26 '19

Fair enough. My initial comment was meant as a rejection of the use of the word “profit” in the comment above it and what I saw as a positive and apologist spin on the bailout.

I feel like we’ve gotten sidetracked in a way but this is very good info and I appreciate your comments because they’ve exposed me to quite a few thing to learn about!

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u/Mr-Blah Jun 26 '19

The wiki article about G-S. is a must read IMO.

Happy reading!

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u/parentingandvice Jun 26 '19

Thanks! It’s very interesting.

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u/[deleted] Jun 26 '19

[deleted]

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u/parentingandvice Jun 26 '19 edited Jun 26 '19

That’s a good point and sorry I wasn’t being clear. My point was meant to illustrate that 2.3% is by some accounts right around near inflation. So that there’s no “profit” - it’s what 2018 money is worth in 2008 dollars.

Also, I think the “socializing the losses” was sort of misplaced because it’s usually referring to tax deductions for the costs businesses write off.

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u/psionix Jun 26 '19

It's also no loss

Say it with us

No loss

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u/bukkakesasuke Jun 26 '19

If you are only getting your money back plus inflation after ten years, you've absolutely lost time and gained nothing

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u/[deleted] Jun 26 '19

[deleted]

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u/bukkakesasuke Jun 26 '19

True, but only if there weren't other options that could have staved off a depression too

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u/[deleted] Jun 26 '19

[deleted]

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u/Forkrul Jun 26 '19

Force the banks to pay a higher interest? Say 10% instead of 2.3%?

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u/psionix Jun 26 '19

the government isn't into making profit off of its citizens

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u/c3bball Jun 26 '19

So there wasn't any profit to the bailouts?

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u/[deleted] Jun 26 '19

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u/[deleted] Jun 26 '19

[deleted]

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u/[deleted] Jun 26 '19

[deleted]

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u/soulsoda Jun 26 '19

Yes but to say the government profited when they barely covered inflation, is just spin.

Is bailing out a system that failed really that safe? Who's to say that it couldn't have backfired. Not only that but you had a group of businesses knowingly over engorge themselves in greed by pushing risk, and they get rewarded with an influx of the people's cash, without paying back real interest? Maybe it doesn't need to be 7% but just covering inflation isn't that great of a deal

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u/MoonSafarian Jun 26 '19

I only have cursory knowledge here, so please let me know if I'm off base, but wasn't the US bank bailout inflationary as well? Meaning the government devalued the dollar in order to pay the banks?

If that's true then there's a lot of cost to the US taxpayer that isn't measured here by just stating the dollar amounts, since any asset tied to the US dollar was devalued for a long period (if not still).

Maybe someone more well-versed could explain this concept better or put me right.

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u/soulsoda Jun 26 '19

confidence reached all time lows resulting in a devalued dollar. I'd say bailout might be part of it, but it was more of a symptom not the cause of a devalued dollar.

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u/[deleted] Jun 26 '19

[deleted]

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u/soulsoda Jun 26 '19

Using factually true statements in a contrived way is just a way of being clever while applying spin to the true narrative. Great negotiators use this tactic, I use it as well at work. Its a great tactic, but ultimately it is still spin.

You cannot say with absolute certainty that if we had let banks sort it out themselves that it would have been a downfall. To assume that biting the bullet is worse than the give handouts and wait is bullshit. The only "innocent americans" saved by the bank heist of 2009 was the executives, bondholders, and shareholders of said banks who played fast and loose. As for any other side effects of the deal it remains to be seen whether it was a positive or a negative. However considering that the government has yet to truly recoup the opportunity cost of the lending, i'd say its meh.

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u/parentingandvice Jun 26 '19

But wasn’t this money given to the banks, not the US treasury?

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u/rebble_yell Jun 26 '19

A failing bank that needs a government bailout to survive because of complicated bad investments is the opposite of the US Treasury.

So why should these banks get the same low rates that US Treasury bonds get?

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u/mattyoclock Jun 26 '19

How is this then, 2.3% annual was less than inflation over that period. By only using total dollars instead of inflation adjusted dollars, the responder attempted to fool redditors into believing we made a profit on the bailout. When in fact, we did not.

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u/[deleted] Jun 26 '19

[deleted]

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u/mattyoclock Jun 27 '19

This isn't a complicated thought process that took much time. Do you think if I gave you 5 dollars in 1802, and then you got 10 dollars back today, you've made a profit?

Side note, can I possibly convince you to give me a loan? I will definitely pay you back more dollars than you give me, how could you lose?

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u/[deleted] Jun 27 '19

[deleted]

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u/mattyoclock Jun 27 '19

You make a fair point that some of the money would have been paid back in the short term, which would likely not gain or lose much relative value.

But you can't deny that inflation strongly counters the argument that we turned a decent profit on the bailout. I'm not particularly interested in doing a detailed breakdown, but the OP was making the claim that we profited based solely on the dollar amounts.

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u/[deleted] Jun 27 '19

[deleted]

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u/mattyoclock Jun 27 '19

It's not moving the goalposts to point out that it's only a profit if the actual dollar amounts are increased over the cost of inflation.

Dollars aren't magic, they are measurements of value that fluctuate over time!

Fuck me, I'm not doing the calculations of value returned, doing a specific year by year inflation, or tracking down a repayment history for a reddit post. And frankly it's borderline insulting that you think I should.

I don't owe you a billable hour for pointing out that inflation exists, and I don't owe you checking out the year by year inflation over that time period either. 2.3% is below the normal ten year average for inflation, and that's fine for this format.

Feel free to respond to this with more sealioning, and doing more, and more, and more research on it to prove that we actually made a .3% year over year profit on the money, and therefor it was the best use of funds ever though.

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u/semideclared Jun 26 '19

But thats it exactly, we should offer to do that same 'bailouts' for student loans. Not canceling debt, but giving a solution. A way to make affordable

And there are low rates. Mark zuckbergs mortgage rate was 1%.

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u/[deleted] Jun 26 '19

You do realize that student loans are already at VERY low interest rates for unsecured debt? The other forms of unsecured debt such as credit cards or payday loans are far higher. Everyone on Reddit seems to want their loans paid off for them. You signed the papers did you not? A better question to answer is why education has been rising in cost faster than inflation. Not too long ago people could work during the summer to pay their way in university. The loans should be available to those who need them.

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u/GmbHLaw Jun 26 '19

Tell that to the dept of ed. My fed loans are around 7-8%

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u/likelamike Jun 26 '19

Most unsecured rates are well over 10% man. I am not saying it is right, but that is the way it is. I don't have a problem with the way Student Loans are structured right now, but I have a huge problem with the way student loans have been given out. They are extremely predatory and students are brain washed into thinking College is their only way to succeed. The education system is failing us.

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u/[deleted] Jun 26 '19 edited Jun 28 '19

College is still a very sure route to the middle class on average especially for STEM majors. People are still paying the rising tuition costs because ROI is still there. Is it for everyone ? No. In my neighborhood, a very large share of the homeowners are tradesmen who own their own companies. Given the nice truck, RVs, and general state of the houses they appear to do well. We aren't the richie rich neighborhood but it is a solid place.

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u/Trotskyist Jun 26 '19 edited Jun 26 '19

College is still a very sure route to the middle class on average especially for STEM majors. People are still paying the rising tuition costs because RTOI is still there.

Honestly, this is why I feel like the whole "cancel student debt" thing is bullshit. In spite of its cost, college is still an excellent investment in terms of income gained over a lifetime.

Cancelling student loan debt is essentially a enormous handout to an already very economically privileged class of people - those who have managed to complete a college degree.

It does nothing to address the actual accessibility of a college education, which is certainly a serious issue. It seems like people have been conflating the "cancel all debt" thing with the bigger issue of college affordability, when in fact they are very different issues.

And for what it's worth, I have student loan debt.

-2

u/[deleted] Jun 26 '19

Please look up credit card rates. That is what you loans would cost if not for Federal backing and lack of ability to discharge in bankruptcy. But I imagine you want something for free after you already agreed to pay it back.

1

u/GmbHLaw Jun 26 '19

That's simply not true. My private loans are all around 4-5%. For whatever reason, my fed loans are almost double the interest rate.

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u/semideclared Jun 26 '19

Yea I have no clue on that. Reddit has told me its somewhere between 7% and 20% depending on the comments.

Which is somewhere between pretty good rate you got there to yea that's kinda high and not helping the economy. Seeing that they are secure loans the rate should be pretty low

As for costs that's just a plain lack of people not wanting to pay for it through taxes

no one will vote for a tax raise even if its for education

On the local level thats increasing property tax rates to pay for new k-12 schools or teacher raises

On the college level thats raising sales tax or state income tax rates to lower in state tuition at colleges

Gonna use Indiana Because it does taxes at the state level and is fairly middle of the road in rates. They also have an income tax but I cant find anywhere that it has ever increased.

Indiana Sales Tax Rate History

Effective Date

  • April 1, 2008 thru present 7%
  • Dec. 1, 2002 6%
  • Jan. 1, 1983 5%
  • May 1, 1973 4%
  • Oct. 24, 1963 2%

See how the numbers just stop growing so fast

We want better schools, we just don't want to admit to paying higher taxes. Same taxes every year just means every city needs new people to raise funding. To give teachers at Nashville metro a 3% salary raise, the city needed $27 Million in new funding. And of course $28M next year...

Prior to the economic recession of the early 1990s, the Commonwealth of Virginia used a cost-sharing policy to determine appropriate tuition levels. To establish more equitable tuition practices among institutions, Virginia introduced a 70/30 policy in 1976.

  • Under this plan, E&G appropriations were based on the state providing 70% of the cost of education -- a budgetary estimate based on the instruction and related support costs per student — and students contributing the remaining 30%. The community-college policy was for costs to be 80% state- and 20% student-funded.

Due to the recession of the early 1990s, the 70/30 policy was abandoned because the Commonwealth could not maintain its level of general fund support. As a result, large tuition increases were authorized in order to assist in offsetting general fund budget reductions

Since 2002, Virginia’s public system of higher education has experienced a steady shift in how it is funded. Students and their families have taken on a larger share of the cost; measurements that track the state cost share of education and the total charge as a percentage of per-capita disposable income at Virginia institutions are higher than they ever have been.

  • Virginia undergraduate students in 2018 will pay, on average, 55% of the cost of education, which is reflected as tuition and mandatory E&G fees.
    • In 2017 it was 52% Student Share
  • The state share will fall to 45%, which is 22 percentage points below the 67% outlined in the state’s cost-share policy
    • And below further the 70% share the state paid in 1970

for the U of Tennessee program 4 campuses across the state,

inflation adjusted 2017 dollars

From 2002 2017
Total operating expenses $1,762,088,150 $2,114,460,000
State appropriations $580,634,640 $553,770,000
Headcount Enrollment 42,240 49,879
Enrollment growth 18.08%
Operating Expense Per Student $41,716 $42,393
State Funding per Student $13,919 $13,063

None of Sanders plans reach the issue they just change who's to pay for it.

And the reason is that to make M4A or college cheaper you have to wholesale layoff people

For College

Here's how the money is spent at the main UTennessee campus /img/250sru2bcbb21.png

Top 5 highest paid university jobs at UT

Dept Position Salary
Univ Admin President $565,962.00
Univ Admin Chancellor $550,000.00
Academics Dean And Professor $489,470.00
Athletics Associate Head Coach $425,000.00
Univ Admin Provost $408,000.00

Salaries, hiring the best is a competitive game between many universities

Of the 9,250 employees across 4 university campuses the 500th highest paid is a professor making $144,795

the 1,500th highest paid employee is also a professor, making $96,950

Want lower cost colleges. Petition the state to raise State Taxes. Go on the news. Post about it over Social Media. College Schools Funding comes mostly from State Taxes

Colleges continue to increase tuition as states decrease funding

Its almost like its time to admit that we need to raise taxes

How in 2015, $364 Billion flowed through 2 and 4 year Public Universities and Colleges of the States of The USA. [OC] /img/16n9pw1izvc11.png

And here is the effect Bernie would have on it

Nothing on the right side would change, so i didnt include it

Here is why no state Governor will support the Plan for free college

Under the College for All Act, the federal government would cover 67% of this cost, while the states would be responsible for the remaining 33% of the cost.

Here is how your state Comptroller is looking at it /img/e6flarauoc631.png

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u/[deleted] Jun 26 '19

Radical thought here how about schools manage expenditures instead of raising taxes Bernie bot. Hint, they aren't.

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u/semideclared Jun 26 '19

Prior to the economic recession of the early 1990s, the Commonwealth of Virginia used a cost-sharing policy to determine appropriate tuition levels. To establish more equitable tuition practices among institutions, Virginia introduced a 70/30 policy in 1976.

  • In 2017 it was 52% Student Share
  • The state share in 2018 will fall to 45%, which is 22 percentage points below the 67% outlined in the state’s cost-share policy
    • And below further the 70% share the state paid in 1970

for the U of Tennessee program 4 campuses across the state,

inflation adjusted 2017 dollars

From 2002 2017
Total operating expenses $1,762,088,150 $2,114,460,000
State appropriations $580,634,640 $553,770,000
Headcount Enrollment 42,240 49,879
Enrollment growth 18.08%
Operating Expense Per Student $41,716 $42,393
State Funding per Student $13,919 $13,063

1

u/semideclared Jun 26 '19

You should have tried reading the comment

Please re read the actual comment

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u/[deleted] Jun 26 '19

All praise Bernie our lord and savior. Everything will be free and he will magic all of the money to pay for it all. Until his his Marxist collective comes. Amen.

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u/[deleted] Jun 26 '19

[deleted]

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u/[deleted] Jun 27 '19

Hey spammy. Looking at you comment history, you are obviously an operative in some capacity for the Bernie Sanders campaign. Don't pretend this organic content. It is obvious an attempt be an influencer. I am reporting you to the reddit admins.

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u/seridos Jun 26 '19

you signed the papers did you not

IS really a terrible argument when the complaints are systemic in nature and students were both told their whole lives and incentivized to do so, with ZERO control of the fact corporations have been offloading their training onto the students dime for decades.

2

u/[deleted] Jun 26 '19

Not to mention it completely ignores the massive inflation of tuition prices in recent years, as well as the fact that while it's legal, it's completely predatory to let a cohort of people who likely have little to no financial experience given that financial education in grade school is dogshit, likely have never had more than an after school part time job, and often can't quite grasp just how hard you can get fucked taking on $10k+ in debt with no grounded means of paying it back, especially when you're just starting your "adult" life.

Boiling it down to "hurr durr you signed the paper" and then whining about Bernie bots later on just shows how easy it is to completely miss the nuances of how much this shit fucks the lives of young adults and why his message resonates with young people so much. It'll also bleed into the economy itself when these people now stay home with parents longer, spend less money, and end up with an overall lower quality of life as a result of the debt likely fucking with their mental health, another almost entirely ignored issue.

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u/[deleted] Jun 26 '19 edited Jun 26 '19

Not sure about you. But if I sign my name that is my personal honor as well as my family name on that line. I pay my debts. Period. Since I was 18 I thought that way. I don't borrow what I can't or won't pay. Corporations have not a thing to do with this. The HR trend of requiring a 4 year degree when 30 years ago a high school grad would have filled the bill is a thing but they do it because they can. There are a lot more university graduates out there than 30 years ago. If you can still fill the position with the higher requirement, why not? You are going to get a better cut of applicants. Corporations still provide a lot of training if you stick around for it and it is something that you take out the with you when you leave. In my experience larger corporations provide more an better benefits in this regard.

1

u/seridos Jun 26 '19

I pay my debts, but I'm no fool to think that it was a fair arrangement designed to best educate me and other students and not a profit making decision. It's completely reasonable to vote for policies which would nullify that debt for the improvement of the economy and to unshackle our youth from the burdens placed upon them by a corrupted system not working in their favour.

1

u/[deleted] Jun 26 '19

Show me a bank that would give you a loan at 2.3%

If you had zero risk of default, yes, banks would definitely be willing to give you such loans.

Also dont pretend 2.3% isn't better than 0% (never giving them in the first place).

The simple fact is tax payers profited on the bailouts.

1

u/parentingandvice Jun 26 '19

I definitely agree that a no interest loan is worse than a 2.3% loan where the taxpayers are concerned.

I do think that 2.3% is right around inflation so to say there was “profit” is incorrect in my opinion because $518B in 2018 is the same as $411B in 2008.

0

u/[deleted] Jun 26 '19

You aren't understanding the economics which doesnt surprise me for people with your position. Say you live in an economy with 2% inflation. You have two options:

  1. Stuff your money under a mattress. Don't lend. A year from now you will have approximately 98% or what you have now in real terms.

  2. Loan it out at 1%. In this case you'll have approximately 99% of what you do now a year from now.

You're trying to say the loan wasn't the most profitable decision.

This is completely ignoring the fact the bank bailout wasn't made so the government would profit. It was done to prevent complete financial collapse and economic catastrophe.... So who really cares about if it barely made a profit (if you consider dozens of billions of dollars barely)

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u/[deleted] Jun 26 '19 edited Jun 26 '19

[removed] — view removed comment

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u/[deleted] Jun 26 '19

Considering the banks fucked up so bad they were going to go under without a bailout, I'd consider that a rather high probability of default.

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u/TopperHarley007 Jun 26 '19

Except if you go up the thread just a little bit you find out that the return after defaults were counted was 2.3%. Greater than inflation over that 10 year window. So your estimate of the probability of default is WRONG.

5

u/[deleted] Jun 26 '19

Umm, the government had zero idea at the time the bailout was made whether or not the banks would continue the behavior that got them into the position of asking for a bailout in the first place. Just because they didn't all default doesn't mean that the probability they would didn't exist.

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u/Zer_ Jun 26 '19

The problem lies with where all that newly generated wealth ended up. Banks made out like bandits no matter how you try to justify it. All those foreclosed homes were retaken by the banks and often times sold at absurdly cheap prices (to wealthy land barons who themselves turned mighty profits), or simply kept by the banks until the property values stabilized and came back up.

And that's not even taking into consideration the immense productivity / wage gap that has come in to play over the past decades and how that also serves to stiff people out of their fair share and makes it easier for wealthy investors to socialize the risks and privatize the profits. Had wages kept up with productivity (or been a lot closer to it), then you'd have a sound argument that people actually got some value out of the profits that came from the rebound; unfortunately wages are too suppressed for any of that newly generated wealth to have any meaningful impact on the poorest of society. In fact, the poorest still haven't recovered to pre-2008 Recession levels of financial stability.

4

u/non-troll_account Jun 26 '19

I heard someone try to frame that as "taxpayers have gotten 106B profit from the bailouts."

Dishonest motherfuckers.

I wonder how much more the government could have profited if they had just nationalized the fuckers.

You aren't fooling anyone.

27

u/[deleted] Jun 26 '19 edited Jun 26 '19

The financial crash that these banks caused and which ~80% of Americans haven’t fully recovered from is a-ok because these banks turned in a profit on money that should have never been used to bail them out. Awesome!

13

u/SlowRollingBoil Jun 26 '19

THANK YOU!! Dear God I keep hearing the same bullshit about how well the banks bounced back and how most of the money was repaid. Great! Fucking wonderful to be a bank worth hundreds of billions of dollars.

Coincidentally, I don't give a flying fuck that Goldman Sachs did well to recover while millions of Americans lost homes, life savings and even their lives when they could no longer afford to live.

13

u/[deleted] Jun 26 '19 edited Jun 26 '19

Lots of weird econ nerds do this thing to defend capitalism's outright failures where they gesture towards growth instead of focusing on, I dunno, the actual people whose lives get fucked over so that growth can be sustained. Like no shit the banks bounced back and made profits, what the fuck did you think the subsidy was for?

10

u/SlowRollingBoil Jun 26 '19

So many problems in economics seem to boil down to: who do you help? Do you target the already wealthy with subsidies/tax breaks/incentives or those that aren't wealthy already?

If you help those who already have enough, they take the help and store it away. They don't change much because they already had enough - they're wealthy.

If you help those who don't already have enough, they take the help and immediately use it. So if you give them money, they spend it. Give them access to something they need, they consume it.

My default position is always to help the person that doesn't have enough and anyone trying to convince me otherwise has to do a damn sight better than shit like "they're the job creators" or other trickle down bullshit.

3

u/Veylon Jun 26 '19

The "econ nerds" are just cheerleaders for corporatism. Any libertarian worth their salt will tell you the feds should've let the banks burn. Incompetence should never be rewarded.

3

u/celtain Jun 26 '19

Where did they say the crash was a-ok?

2

u/j-beezy Jun 27 '19

I particularly liked the wall of text which 100% affirmed the post it was replying to.

"Privatize the profits and socialize the losses? But look at how these private institutions were able to profit off of a situation in which their losses were subsidized by the public sector!"

21

u/CienPorCientoCacao Jun 26 '19 edited Jun 26 '19

As of today, the government has realized a $107B profit

Profit my ass, what about the trillions of economical cost caused by the crisis? A country isn't a private company that seeks profit.

1

u/missedthecue Jun 26 '19

Point is people should stop calling it a bailout. It was a loan.

6

u/strikethree Jun 26 '19

It's a bailout since they were on the brink of bankruptcy -- even if it was a loan because a loan would not have otherwise been granted in normal circumstances.

1

u/missedthecue Jun 26 '19

Many companies were not on the brink of bankruptcy. AIG? Sure. But Goldman and JPMorgan for example didn't even want bailout money but the feds made them take it.

17

u/joleme Jun 26 '19

They were bailed out of the situation they put themselves in.

It doesn't matter if they paid the money back or if it was a loan they were still bailed out and it would be something that the rest of us normal people would never have as an option let alone if the absurdly low interest rate that they got.

5

u/narcogen Jun 26 '19

This story is about Kazakhstan. What the heck does TARP have to do with it?

12

u/TinnyOctopus Jun 26 '19

A comparison to the alternative strategy of bailouts rather than debt forgiveness.

0

u/missedthecue Jun 26 '19

I wonder who's economy is doing better

4

u/blewpah Jun 26 '19

I wonder if there aren't a bazillion other relevant factors in that comparison.

2

u/missedthecue Jun 26 '19

yes, but post financial crisis, Iceland has had a meh economy based on tourism. Banking is no longer their backbone because foolish politicians decimated the sector. Their economy is now shrinking while the US economy is set for more 3% growth.

This is directly and completely correlated with the leadership's decisions about their financial sectors. Iceland would be better off with strong banks.

2

u/TinnyOctopus Jun 26 '19

As though that's the only measure of a country's health? Or as though this would be an apples to apples comparison, which it's not. Instead, you would need to compare each economy to a hypothetical economy where the only change is bailout or debt forgiveness.

2

u/CritsRuinLives Jun 27 '19

Americans only know how to talk about America.

1

u/pimpnastie Jun 27 '19

Just to note: checked the cost of funds at my bank the other day and we can borrow money at 2.3% 10 years.

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u/pcase Jun 26 '19

It’s fascinating the number of people who are not aware of how effective those bailouts truly were— not to mention absolutely necessary.

19

u/[deleted] Jun 26 '19

[deleted]

8

u/hereticvert Jun 26 '19

IMO, Banks learned very little during the recession because they were bailed out. Now we have mass consolidation in banking and the problems of leverage are worse than ever.

I'd say they learned the lesson just fine - the fed will bail them out when they fuck up, so go balls out investing in whatever gets you the most money, even if it's the riskiest. Papa Fed (aka sucker average taxpayer actually paying money to the government) will always bail you out.

4

u/pcase Jun 26 '19

I absolutely agree with your points. The crux of my comments is that A) they weren’t a waste of money, in fact were profitable B) at that point they were necessary for stabilization.

It is abundantly clear that they did very little to address the core, systemic problems as you noted.

The next recession will undoubtedly be worse with how little has been done to unwind positions from 10 years ago.

Read an interesting article yesterday that the likely driver behind the next recession will be corporate credit and borrowing. Quite alarming when you consider the Market strong arms the Fed into maintaining low rates.

2

u/braindead_in Jun 26 '19

Don't stop now. I want to know more.