Prof. Antony Davies: College and Housing Bubbles, Explained
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- เผยแพร่เมื่อ 28 ส.ค. 2024
- Remember the mid-2000s housing crash that wiped out homeowners? Well, there’s another bubble getting ready to pop, and this one’s in student debt. Prof. Antony Davies explains.
🎙️ Professor Davies also co-hosts a PODCAST! Find him and James R. Harrigan in the Words & Numbers podcast: wordsandnumber... 🎙️
SUBSCRIBE: bit.ly/2dUx6wg
LEARN MORE:
Why Do We Have Student Loans? (video): Student loans skyrocketed from the 1980s to the 2007 recession. Professor Brian Domitrovic says this is a bubble that needs to pop.
• Student Loans, Explained
2016 Presidential Election: Student Debt (video): Forgiving student loan debt and increasing subsidies for higher education were popular ideas on the campaign trail in the 2016 presidential election, and they remain popular ideas today. Professor Don Boudreaux explains why these policy changes would lead to negative outcomes while failing to address the underlying issues at play.
• 2016 Presidential Elec...
How to Solve the Student Debt Crisis (video): Manhattan Institute fellow Jared Meyer talks about how innovation in the student loan industry could help solve the student debt crisis.
• How to Solve the Stude...
TRANSCRIPT:
For a full transcript please visit: www.learnlibert...
LEARN LIBERTY:
Your resource for exploring the ideas of a free society. We tackle big questions about what makes a society free or prosperous and how we can improve the world we live in. Watch more at www.learnlibert....
"And the problem was blamed on greed. Well you don't satisfy your greed by lending to people who can't pay you back."
--Thomas Sowell
My favorite moment of all time was when Maxine Waters was trying to grill a bunch of banks about bad lending practices RE: Student Loans, and one by one these bank CEOs leaned forward and said some version of the following: "Well, actually, the government took over the student loan market, so we stopped giving out student loans in 2009."
people wonder why college is crazy expensive...when feds got involved in college loans of course schools are going to rip people off....cant write off student loans or bankruptcy.. remember when a summer job and maybye working part time you could pay for you own schooling and graduate debt free.
@William Loudermilk all these people 10-15 years ago that really thought they could afford a home....all adjustable rate mortages that failed...i had friends that would not listen to reason.
@@workingshlub8861 wish we college students had someone of reason to warn us. All throughout life kids are brainwashed. go to college, go to college....like its a requirement. you can lie you way through a job and be taught most of the skills but employers dont like that. they need sheeple smh
What's the best way to get rid of the student loan crisis? Get the government out of it.
@@caster863 well if the government stopped guaranteeing everybody a loan that would be a start
Finally, after 14 years, someone explained the financial crisis in a way that is easy to understand AND logical. Thanks!!!
They made a 3 hour movie that made it a million times more complicated than it actually is, whilst claiming it was simplifying it lol
@@luck3yp0rk93 Do you remember the year it came out at a bare minimum, if you don't remember the title ?
@@luck3yp0rk93 you mean the Big Short that is based on anti-capitalist propaganda?
@@joecooper8527 this is so late, but it’s THE BIG SHORT
@@MCmichaelD_ Appreciate you taking the time to answer.
Where the heck was this video before I spent 100k on a film degree?
that might be the worst trading deal in history maybe ever.
what the f#*@ is a film degree? Lmao do you americans invent a degree for every job out there? Well i guess i'm going to get my degree in cleaning toilets next cause that shit is gonna bring me money ain't it?
+Fungway Foon Can't wait for the bubble to collapse.
annonym surfer, What country are you from?
+A hole in the ozone why do you ask?
This is one of the most important videos you could ever watch.
Yeah, I guess many would be greatly benefited by hearing this, although I am not sure how many student loan holders would really assent to this, as opposed to keeping their narrative. After all, they do in fact hold a lot of debt they can't repay and knowing this is not going to get that red number to turn green anytime soon.
It would be great for high-schoolers though.
As for the most important video one could ever watch...
th-cam.com/video/rd9oIE5UXI8/w-d-xo.html
Every recession could probably be traced back to government trying to artificially "fix" the economy.
@Tyler Durden every financial issue in the world today can be tracked back to the majority of stupid people who vote to steal from the productive layer of the society giving the government the power to this kind of stuff.
@Tyler Durden I thought the central bank only print 3% of the money supply, private banks print 97% according to Richard Werner.
Ariyan Sahebghalam that is right and every president who was against the central banks ended up, with a “headache”
Tyler Durden thank you, END THE FED. Look up “The Creature from Jekyll Island”
Ariyan Sahebghalam yes that is called fractional reserve lending, all of that money is created out of thin air as well. The main control the federal reserve has is artificially controlling interest rates, and pumping money into the markets when the ultimate ills of such a system fear their ugly face, which has happened many times, and is happening today. Stealth QE4 baby
Please continue doing these longer lectures with Antony Davies!
He was my econ professor in college. He is amazing!
Unfortunately, davies is telling a lie when he says that savers lend to borrowers. What actually happens is that new money is created when people lend money via the banks- through fractional reserve banking. With a fractional reserve of 10% banks can create up to ten times the original money.
IMO: College is a bad idea if you do not intend to pursue a professional degree such as law, medicine, engineering etc.... The risk of a low return job is too high for most other fields.
Any college grad can get a job with the employer of last resort..."da gubmint", where they'll enjoy a satisfying career doing work that's been ostensibly created out of thin air.
Jon dow don’t try and give the government a pass here. Our financial system is inherently evil by the most ancient standards - there is no need for a government to step in an allow or deliberately increase it’s evil, yet our occult-lovin’ congress did just that.
@Jon dow
No Jon, politicians did exactly what the people who voted them into office wanted. Often I remember listening to civil liberty advocates telling Americans that everyone should have the opportunities to own property and attend higher education, even those people who were less capable of doing so. Remember, the big push for equality and diversity? Everyone should have the same opportunities in America. Remember all those moments?
So, really the ones to blame for everything are the American people who took those sub-prime mortgages, who were high-risk liabilities and knew they were, and those college students who don't seem to understand how compounding interest rates work.
yes...BUT... the risk of not getting a job at all is high for not having a degree--not because the job is different but because now jobs that didn't require a degrees in the past now arbitrarily do--so you're damned if you do and damned if you don't
@@barbparknavy9119 you can just learn a trade, or if you're smart with your money, and didn't make purchases where you're tied down to a commitment. You should be fine.
This is what I have been thinking for years now. And I was laughed at for such ideas
Same people always looked at me like I was crazy when I ranted about the govt lol
Unfortunately, the day of our vindication will be just a tragedy.
I'm watching this in 2019 and all I can say is, holy crap!!!! The predictions where insanely accurate.
Yeah I was going to say "wait I hear a lot of people today bashing college and student load debt" but honestly the high school system is going to continue to brow-beat students into going to college, because that is the measure of success for the high school. Not necessarily the long term success of the student. That would be too hard to measure though...
@@AndrewLaw87 also, every high school teacher went to college so they're a little biased.
watching in 2022, holy crap!!!!...
yeah still accurate.
I'm not sure if you're a professor or not, but this is the second video I've watched from Learn Liberty. I worked 10 years in finance, and predicted the housing crisis almost 2 years before it burst. The company I worked for hit me with an NDA when I attempted to tell clients about this.
My point is that trying to explain the 2008 crisis is not incredibly simple, but this video did it fantastic. Missed one of two things, but it would complicate it needlessly. Very, very well done. /subbed.
Without any "skin in the game" (Nassim N. Taleb), the same crash will occur to the student loan industry as it did the mortgage and lending industry.
Nothing in this world comes for free. Absolutely nothing.
@ well the government was giving away free money, you'd do the same thing they did.
@ and all of this happened because the government backed those mortgages, similar with all those stupid government programs like "affordable this" act and "affordable that" act created by career politicians elected by stupid people who want free shit that voted to steal from the productive layer of the society while also refusing to acknowledge that their mentality is the reason why their life is poor and pathetic.
If it wasn't for the government regulating, subsidizing and backing those bad loans the banks would never have risked lending money to people's pets.
This is the reason why education is so expensive, or healthcare and why ever sector of the economy which is subsidized by the fed government lacks product/service quality but has a high price and no competition.
The only monopoly people should worry about is the one the governments are creating.
I'm not a fan of the banks by any stretch of the imagination but the culprits here are the people who voted for free shit into office.
It's like throwing a stag (free money) in the pit with a starving lion (the banks) and then being surprised that the lion ate the stag and then blame the lion instead of the person who threw the stag in the pit in the first place (the government)
This is a very underrated channel...
On another note, I wish students would consider degrees that would get them jobs. Maybe consider the job before they consider the degree. Right now it seems like most consider the degree before the job prospects afterwards.
I considered the degree first because I thought there should have been good jobs after but there wasn't. In the end I went back for another degree that I knew would land me a good job. Not everyone has the ability, money, or time for that though.
Edit: spelling and weird formatting correction.
"The banks did exactly what the government encouraged them to do..."
This is a fact I think most Americans choose to ignore.
I have researched the education bubble for 4 years. College is too expensive for middle class and poor families. Don't get student loans.
Yea, I give that advice to young people. I am in debt for life with a worthless degree that won't get me out of entry-level. When I realized I would be in debt to my student loans until I die, I dedicated myself to giving the guidance to young people that I never had. Nothing can be done for me with snowballing and compounding interest, but at least I can help others not make the same mistake.
College Debt Slavery-on kindle nah, not if you go the community college route, transfer to a 4 year STATE university, you could get a degree for less than 30k (easily doable with a part time job while living at home). Part of the problem is selling college as a “lifestyle” not a means to an end. The other problem was the idea that EVERYONE should be college educated, along with the lowering of standards to meet that demand.
Go into the service and let the GI Bill pay for it... plus serving gives you a bigger world view... well... usually.
@@hawkeye0927 The Post 9/11 GI bill doesn't cover everything. You will still be coming out of pocket to go to college. As of 2019 veterans accounted for $168 million of defaulted loans. You need a substantial savings fund to pair with the GI bill if you want to graduate debt free.
@@hawkeye0927 i wish I could like that 10x. I wouldnt go to college unless i had that scholarship...
This is the type of stuff that needs to be taught in HS. Preferably before the kids born after 2008 reach the comprehension age of this, so they can contextualize the change.
Thank you for your clear and concise lectures. The Media explains nothing, only half the story. You have opened up doors for me.
13:42 To be clear - when he says the cost of education is artificially low, he's talking about opportunity cost. He states later "tuition artificially rising as well". How can the cost be low if the tuition is rising? It's important to understand that in economics "cost" is not the same as "price". The price of something is how much you have to pay to get it. The cost is what you have to give up instead. If the government is giving out risky loans and then forgiving those loans, many students, particularly those who realistically should not be attending college - either because a trade school would be better for them or because they are attending college in majors that have no earning potential after graduation - are ultimately not paying for the college education themselves. And even for those who are, the fact that it is so easy to get a loan from the government to go to college masks the prices, so the student often either don't even know, or don't understand how much money it is that they are paying for college.
In short, the "cost" is how much effort is required to get financing put into place, not the tuition. And if the loan is forgiven later, the cost to the student is effectively nothing, so there is no incentive for the student to make sure they are actually learning a marketable skill.
I'm glad you guys released a presentation on this. Most people just regurgitate the same stupid ass talking point about how deregulation was the problem and that's why the government needs even more control over the economy.
Funny how you're just forgetting how the Dodd-Frank Act increased government oversight on the banks and led to the longest consecutive Bull-Market economy in American history.
@@TonesBalones What good is oversight by a government that caused the housing market crash in the first place?
Arielle Ridgeway LoL what
Arielle Ridgeway what the credit rating agencies did wasn’t regulated cause normally no one would do it but since banks were forced to give mortgages to low income individuals suddenly there was a need to put bad mortgages in a tranche with good mortgages and sell it as a bond. Normally no one would do that but since the government got involved that meant greedy credit rating agencies abused the system.
In this case, it's not so much that we need more government control, as it is that we need our government to do its job. Our government is fully capable of regulating student loan and mortgage industries, it just doesn't, partially because the federal government also profits from the interest on some student loans.
The reason we have such expensive schools is because the government practically guarantees any student, irrelevant of their ability to pay, the money to attend higher education. This means that schools can be less competitive on price and less efficient with their expenses and still be 'guaranteed' a paying user base. Cut out all these gov programs and we'd see schools become efficient on their spending and we'd see the cost of higher education drop as more compete for enrollment.
Exactly. If the college wasn't flooded with people that don't necessarily belong there (not to mention all the pseudoscience low income branches of "science"), the supply of education (students) would drop and then be affordable to those that actually deserve the education. On top of that, the education in Finland where I live, is entirely on the public sector (and they don't accredit private educators ), and therefore the quality of the education (which by my experience, is low) suffers from the indirect effects that removing competition has. Teacher's and students pay and benefits are not performance based, which creates laziness.
One thing not mentioned in his lecture that makes the situation even worse is the fact that many people will be saddled with loans but never make it to getting a degree.
These are GREAT presentations, I have learnt SO much from Antony Davies! He is class - the Jordan Peterson of numbers!
You mean he talks incoherently and with a severe lack of concision?
Watching the majority of my friends go 30k or more in debt for college then working as waiters for a decade made me quite happy about my choice not to buy college.
A two-fold choice initially made because I was sick of public school bullshit, and also because I was conscious of the price tag for me as well as my parents. I learned early how to earn and spend money simply by working. Turns out you can go to college parties without being a student anyway!
This is the same situation almost word for word with my friends.
So you're happy about other peoeple's pain. Sick
@@Frankincensedjb123 That's an obviously stupid thing you just said. There's probably a reason you lie like this.
This may be the best video on the problem of higher education I have ever seen. Simple direct and to the point. I’m envious of how good this was.
Daniel, glad you enjoyed it!
Although this is a bit of an oversimplification of the 2008-2009 downturn, this is a fantastic explanation of the forces behind the scene. Thank you for posting this!
The colleges in my area are already seeing a 5% drop in enrollment the last few years
LancGuy13 TX?
Because our economy is functioning and people are hiring (Donald Trump)
Will the student loan bubble mean all the social justice/postmodernist professors will lose their jobs. if so it could be a blessing in disguise.
Greenwithao we'll have to subsidize them. Not a blessing lol
zlyons1191 we already subsided them. At least they won't be corrupting minds.
Did all the bankers lose their jobs?
Ha!
Ha ha!
Ha ha ha!
If only................Sob!
LOL
You can’t live in a college degree. Who would take on debt to read a book? What a scam
Exactly
7:20 'govt broke natural relationship between risk and return,' 'lowered penalty for bad decisions,' 'made taxpayers pay' for bad banks and irresponsible people and 14:00 bad students.
7:20 'govt broke natural relationship between risk and return,' 'lowered penalty for bad decisions,' 'made taxpayers pay' for bad banks and irresponsible people and 14:00 bad students.
When I graduated from a State university in 1997 after graduating from a private Baptist university two years earlier i had a student debt of $68.78. That was the amount of my graduation expenses. I went to school while working full time and paying almost all of my own expenses. It took over 8 years to finish but it was worth it. Few college students can even comprehend the effects that a student loan has. At least the underlying asset of a mortgage - a house - tends to appreciate in value over time. Most college degrees do not.
i love the use of cats in this.
This is better than a 10000 dollar art degree
$10,000? add another zero to that number... People pay way too much for higher education these days.
@@MrMattumbo yeah 10,000 a year maybe
@@buckeye9983 That's too cheap still, even my lower-priced in-state public university is $10k a semester. You go out of state or to a private art college and you're paying closer to $50k a semester. (You're better off burning that money and making the ashes into an art piece, it'll take your art career further).
People these days are shmucks going to college without a vision for what they want to do and how they will pay back their loans, and their parents are idiots.
They call it a banana duct tape to a wall
Damm am I glad I was not stupid enough to go to college . Lemmings
Well not to troll you, but I'm pretty happy with $120k/yr starting with an engineering degree
@renegade_ace Thanks for your clarification. However, I'm not buying it. If this guy went to college, maybe he would realize he should clarify this point for himself! I understand that some degrees are worthless and that probably most college folk are lemmings. However, not all of them ;)
That's a great degree, and I'm glad that you had success, but for the majority of people it didn't turn out so well
@renegade_ace No, the op was dissing college, itself.
@@fiddlepants5947 what degree did you get and where are you working? 120k starting out as an engineer pretty much never happens.
Living in the UK, having studied Engineering to a Masters level and now work in a top Engineering firm. I can see how the UK is following in the same footsteps in my own actions after moving into the workforce. I try to shift as much of my income through company benefits such as maximising my pension contribution, gym membership, dental, eye care, etc so that I pay the least amount if any per year back to the Government for my student loan, as I would suggest anyone do given that the “debt” has an end date. I am now 2 years into my career, have paid nothing back for my student “debt” and have financially planned at least my next few years to never go above the threshold at which you pay back the student “debt”, whilst coasting directly beneath it to live very comfortably
TLDR: If you studied in the UK, maximise the benefits you get out of the company you work for to pay as little student “debt” back and keeping as much income for yourself as possible
Pretty good stuff. One missed factor in the student loan area is problems with bankruptcy and student loans. If you have a student loan and file bankruptcy, that loan will not be discharged by the court. Its like luggage, it'll stay with you for life. That is another aspect of the breaking of risk for the lenders.
I think Professor Davies doesn't realize that being unable to discharge student loan debt in bankruptcy actually ENCOURAGES lenders to make risky student loans.
Although I doubt that many aspiring college students give much thought to the fact that student loan debt can't be discharged in bankruptcy, I could see how removing the bankruptcy protection might encourage students to make riskier decisions about how much to borrow for college and what to study.
However, this cuts both ways. If the lender knows that the student loan debt can never be discharged in bankruptcy, the theoretical possibility of being able to get a judgment and attach that to the student's assets -- even 30 years later -- makes the lender less concerned about the student's immediate prospects for finding gainful employment. It also makes risky student loans more marketable (to collection agencies) when they know that the loan effectively has no statute of limitations.
Of course, changing the bankruptcy law will have little effect on the market for education with the rampant money printing by the Federal Reserve and all of the other government interventions. But, in and of itself, I would consider the ability to discharge debt in bankruptcy as an incentive to evaluate borrowers more carefully.
I'd like to see this guy explain how the AMA has acted as a cartel from it's inception, pushing states to restrict the supply of medical professionals and hospital rooms, while medicare, medicaid, and employer provided health insurance has steadily increased demand.
They've made college education too easy and too expensive. Its not what u can teach ur student but how much $$ u can make from them.
As a college professor who is moving out of this dead industry because of all that is mentioned here and more, I've played this for my students in recent semesters. College enrollment is way down, classes are being cut left and right and soon 20-25% of colleges will go out of business. For profit colleges have taken a hit in recent years, as they should have (I've worked for a few of those and have seen several close). Let's also point out the fact that enrollment at public schools has dropped by the millions too. I've been teaching of these ills to college students for years. Nothing here surprises me.
(Particle board, rather than plywood.)
OSB....Oriented Strand Board
@@Popeye151 Pressed dog sh t.
Phenomenal video!!
Pretty sure you meant the Higher Education Opportunity Act of 2008 and not the ACA.
Thank you for your video, this was extremely informative.
but if the student loan bubble bursts, where will we go to learn to be aggrieved social justice snowflake warriors? I am soooo o triggered right now
As soon as you involve the government it starts to go wrong.
The Federal Reserve is not a government entity, it’s a private organization.
Wow! ive seen and read a number of things about the housing bubble, and trying to understand the scope of oversight, and greed of these people, can be a daunting task… but this guy really puts the whole issue in a nutshell quite well and keeps you listening. Very informative.
OSB or MDF...not plywood.
The solution to the boom/bust cycle is to have private profit-driven lenders only...and to let them fail if they take on too many risky borrowers.
There are examples of small private banks that did not need bailouts during the crash. They chose their borrowers carefully. Some even had zero foreclosures. The answer here is simple. The lenders must have skin in the game. They must feel as though they're lending their own money. If they're lending their own money, they'll be more careful who the lend it to. Make it clear there will be no bailout. If you lend to unstable buyers who don't pay, you're going to lose your bank. You are going to be out on the street. Also, borrowers must feel ownership of the property. They must have skin in the game. Require downpayments of 20% or more. If you walk away, you're going to lose that money.
There are so many problems with higher education and the way its funded. First, kids are borrowing money to get degrees that have no hope of helping them attain gainful employment once they graduate. Secondly, the more easy borrowing we allow for college, the higher and higher tuitions will become. If lenders would stop lending money to people who want to study art history or women's studies, people would have to pay for them with cash or the degrees would disappear.
Yup, we're a full on socialist society and in denial about it, and in denial about the problems, bubbles, crashes, our socialism causes.
It's not just socialism, it's also the 180 degrees from that to the right, corporatism. Since Reagan they have basically been looting the government.
This was excellent, thanks!
One other key difference with the housing bubble: A mortgagor who was foreclosed upon had (1) an asset that could offset the total defaulted debt (which was discussed) and (2) the option by the borrower to discharge any deficiency remaining after the foreclosure sale through bankruptcy. Good faith but unlucky student loan debtors have neither of those safety nets.
The question seems not to be "will this fail?" but instead "when this fails, who shall bear the burden?"
I said it once, I say it again, Baby Boomers are the Greediest Generation
all you have to do is look at social security, it's the ultimate scam.
I pay money into a pool and then that money then goes to people who who didnt save for retirement. Why should we be giving people paychecks every month for no good reason? If i put the percentage amount of social security into my own retirement, we would all be much wealthier in our old age. Baby Boomers are truly the evilest generation
@@jailbreaker1214 Social security is a huge ponzi scheme but since it's gov't run it's ok even if normal ponzi schemes are illegal.
worst waste of human beings. Only generation that could suvive and raise a family on a minimum wage job. while our generation is working sometimes 2 full time jobs to stay out of default. Seriously screwed up world we live in.
Like listening to Professor Davies. He does a great job of simplifying these concepts.
This video misses the key point that there is no wiping out of student loan debt, and also that a lot of student debt is not underwritten by the government. Plus, only 25% of Americans go to college even now. And employment opportunities are in fact better for college grads, which is the actual word going around. It now takes a college degree to get hired at Starbucks in major cities! Additionally, there are no equivalents of mortgage backed securities for student loans. They don't wind up in pension plan portfolios.
So while the government underwriting may have been able to cause a housing crisis, I don't think it can cause the same in student loans. The issue I see with student loans is more that too many people wind up with debt they can't repay that then prevents them from participating in the economy in more productive ways for them and the country as a whole. Young energy is being mal-invested, and credit/debit that should be helping people get ahead is instead holding them back.
well stated and spoken. They are crushing us and pushing further into the hole. Soon enough they wont even leave the house and they market will go to shit. They neeed to simply lower the taxes for debt ridden college student and freeze the interest rate so they can clear up some of the debt. Heard in the uk....there is a cap for student loan debt. In america it will grow till you die.
This is the most important channel on TH-cam
The colleges already got their money. The student loan holders and taxpayers will be out. Another factor is the internet. Bricks and mortar colleges are used to having lots of students and charging them high tuitions. Once the students wise up and find they can get the same education on the internet for a fraction of the cost, the colleges will be in crisis. At some point, companies will come out and discover they can offer degrees at a fraction of the cost online using the power of the internet. What has to happen is, the companies hiring have to recognize that they can get employees with online degrees with equivalent skills.
Excellent video. Well done. I especially liked the summary at the end. The Professor knows his stuff.
Add money into a system and the price goes up. That's what always happens and it should make people be adamantly against these loans. So now we have stealth inflation, expensive houses and wages have fallen behind. So your earnings are behind, your savings get almost no interest and the rich have more power than ever.
In 2022, this man sounds like a prophet. Simple economics at work I guess.
Great presentation! Observation: Education is big business first and foremost. Excluding lab, courses could be offered online for pennies on the dollar, our 20th. century bricks and mortar classroom model is obsolete but will die a very slow death as no politician will dare champion the case of a truly affordable education. It now takes a BS degree to do what my generation did (if you are fortunate) with a HS diploma. Kids with a sheepskin are working fast food, bussing tables and handling freight on my turf. Progress? The UK of today the USA of tomorrow, the sun is setting in America and our bureaucrats driving the hearse.
Another factor was a spike in oil prices above $150 a barrel and gasoline above $4 a gallon: It severely strained household budgets and made living in a large house far-flung from peoples’ jobs no longer desirable.
Makes me question every day whether taking loans out for college and Uni is worth it.
*whether. Clearly you need those loans, because you’re obviously not on scholarship
In the case of most majors you can cheaply learn actual career based skills with respect to that major from the internet rather than college. I am going to college but thanks to inefficient teachers I learn most of my stuff through youtube lol.
It's worth it for certain majors--typically STEM fields. Go to a cheap community college for two years and then transfer to your own state's university. If STEM is not your thing, just get the cheapest diploma you can manage while working on whatever you plan to do. The experience will be worth much more, and the diploma will satisfy the HR departments.
Or be brave and start your own business out of high school. You'll learn much more and make money sooner.
I took out the maximum amount of student loans to attend a two year community college program that the local nuclear plant sponsored.
$20k in debt but it took me from a career in retail making $35k a year to a career in the nuclear industry making six figures. Totally worth it.
Just isn't worth it for a degree in anthropology, English, African American studies, women's studies... basically any degree than ends in "studies".
It depends on the major, taking out loans for a degree that is in demand can be an excellent investment. However if there is no job market you may well be wasting not just your money, but also your time.
Very articulate and well explained. Don't buy crap you can't afford.
When my college goes out business,
I am buying their soccer field. And then I am gong to rename night keg party.
This man's videos need sooo many more views.
High risk borrowers did not just show up. Banks and others got the word out.
Huh? So it is the fault of the banks because they marketed their product? Banks are businesses. If they are offered an opportunity to make money, they are going to do it. Basically, the risk was removed, so the bank had no risk in offering high-risk loans, so of course they are going to do this. The banks aren't somehow evil in all this - they are acting in their own self interest...just like everyone does.
Democrats keep thinking that they can pass laws to "help" the needy and everyone is just supposed to do what is best for the country in the meantime. That's not the real world. Republican policies might seem heartless to people who don't have an understanding that people WILL act in a self-interested manner.
Ask yourself this - with all of the policies designed to "help" low-income people get housing...are you going to deny that the housing prices increased dramatically (and artificially)? If you acknowledge that housing prices increased, you have to ask why. And if you acknowledge that there was a bubble that burst, you also have to acknowledge that the housing price increase was due to artificial reasons and was not market-driven. And if you think that these policies have stopped now that we have gone through a crash, you aren't paying attention. The same policies that led to the housing crash are still in place. The politicians would have you believe it was the lack of regulation on the banks that led to the housing crash, but that's a misdirection and doesn't explain the root cause.
I'm not saying banks were not at fault here - I'm just saying that the behavior of banks was reasonable and predictable, so to blame them is to ignore why the problem started.
It was more than just the banks getting the word out. You can look to people like Maxine Waters, Barney Frank, Dianne Finestein and many others who all promoted the idea that everybody should be able to buy into the American Dream of home ownership. This was all part of the Newt Gingrich compromise era, so don't think it was just the Democrats.
Eric Bess Bankers were definitely evil along with the government they lobby. These people are not stupid. They got away with billions and meanwhile you can choke a man to death for suspicion of selling loose cigarettes. Capitalism corrupts everything.
+dont use Always Of course the banks got the word out. That's what the government was telling them to do! They were rated according to CRA standards.
Banks are a business and they can not force an individual to take out a loan they can't afford. What the banks did was simply approve loans to people who were acting in their own interest that under normal circumstances would have been denied approval. Individuals borrowing money they had no way to pay back to the banks that were given a safety net by the government are all to blame. The policy set by government allowed for banks to do what they do and loan more money. You can blame all of them, the individual who should have known better, the banks for being banks and giving money to people, and the government that acted beyond the purpose a government is useful and instead of just simply ensuring the law is enforced and contracts are honored it started to manipulate what those contracts between individuals terms are.
Capitalism is essentially freedom, the problem is that even the government is apparently for sale due to the ignorance of the people and politicians always seemingly trying to work when they should just not exist as permanent positions of employment. You can never have a stable system when the system is constantly changing itself and expanding because we give representatives full-time jobs to go do 1 or 2 things they campaigned on and actually have approval for. Somehow we allowed what was supposed to be a limited government for the people become a 5 million employee 4 trillion a year operational budget militarized corporation.
Outstanding explanation, very well delivered. Thanks very much for posting.
So if we know it's coming, how do we invest to make money off of it?
I am thinking invest in certification companies. Employers are still going to be looking for people with certifications as prime employee applicants.
Once the college bubble bursts, Kids will go to trade schools. The colleges that will survive would be the STEM focus campuses. Certification Companies will be in the mix as well, but probably not a big alternative.
Think of the local businesses near you. Can people substitute a local business with a internet business? Why or why not? The "why nots" have a potential to weather the storm better. The education institution that teaches relevant skills to job achievement will survive. America will finally get back in touch with its blue collar roots.
I think he's asking what to short. I would then look for the student loan equivalent of the prepackaged "mortgage backed securities" or companies that offer them. I.E. Navient (NAVI), SLM (SLM) and Nelnet (NNI)
You stay the heck away from it and you go around telling everyone how psychotic it all is. Then you tell them to vote for sane politicians... if they can find one.
Yomiel Shields, basically you become a member of the board of directors of multiple large corporations. Then you network with board members of other large corporations and politicians. It's called the inside track or "the smart money".
Back in the day most people born in 40s and 50s were able to work part time while going to school and pay off a large chunk of their college tuition before graduating. On top of living expenses and beer money. Purchasing power of the dollar was strong, wages were steady, and a large part of the workforce were unionized. Couldn't tell you why it worked then
Well here comes the FREE TUITION gang ! Sadly its like the last person moving out to the country from the city. They want to be the last person to do so.
I love it when I have some knowledge dropped on me.
It seems overly simplistic to blame the entire housing crisis on Fannie Mae and Freddie Mac. Private investment houses who were repackaging high-risk loans into safe-seeming securities, and the ratings firms (Moody's, S&P) that gave them high ratings, both had a big hand in the increased supply of loans to high-risk borrowers. At the height of the boom, private funds were buying far more subprime mortgages than FM & FM. They were so hungry for more loans to repackage that they (private investment firms doing the packaging) were actively incentivizing brokers to make loans to home buyers with zero income documentation.
The ratings firms are to blame in that they were in the pockets of the firms they were rating. But the reason this was possible was because the government prevented competition. To be a rating agency requires a government license, and the government only licensed a few agencies.
"At the height of the boom, private funds were buying far more subprime mortgages than FM & FM." At the height of the boom, FM and FM alone held almost 50% of all mortgages.
Antony Davies I agree with all of that. I wasn't implying that government intervention in markets is good. But this video leaves out a pretty big piece of the puzzle, and to me that's unfortunate because it makes it easier to dismiss some of his arguments.
Antony Davies Also, yes FM & FM held nearly half of all mortgages at the height of the boom, but they were not buying most of all the new mortgages being created. At the height of the boom, when the snowball was really rolling downhill, FM & FM were basically "full" and the vast majority of bad loans were being bought and packaged by big banks.
I made a similar comment and agree with you that leaving out the fallibility of the private market does a disservice to the point the speaker is making about college loans. College loans are far worse than the housing bubble considering what we learned from the for-profit college system. These schools existed purely because the government basically backs any loan up to any amount.
If we let the banks decide who was worth a loan this problem would sort itself out. Though it may be too late for that now.
FM & FM, through the Community Reinvestment Act, basically bankrolled the creation of the sub-prime mortgage market in the first place.
Ben Bernanke, in a eye-opening statement, stated twice that the Act was responsible for the market "servicing the demand" for consumers at that level.
Equally, I recommend you to check out this lecture by John A Allison, in particular, his testimony of what banking regulators were ENCOURAGING banks to do, because they thought financial actors like Citibank and others had it "all figured out".
th-cam.com/video/dGmDSXN9N5Q/w-d-xo.html
got a 17 yr old. had to have had a frank discussion with her, oh btw you know how I told you your whole life that college is the golden path, well turns out that was bs. despite her great GPA, she is going to community college on the taxpayers dime and we are hoping the bubble bursts in the next two years.
we shouldn't let companies off the hook either, this stubborn and arbitrary requirement for a college degree is antiquated and counterproductive
It depends on the degree.
Interestingly Home Depot has read the tea leaves and are very concerned about their business model of home owners of the future making their own repairs as the millennials DO NOT understand simple mechanics such as reading a tape measure. Home Depot has actually started a series of videos that come across as teaching a kindergartener these simplistic mechanics.
greenskeeper59 hahahaha that's hilarious
It's true, I have even used their videos when tackling projects I have not done before, like laying a tile floor.
No.. it's not what you have done and/or accomplished with their tutorials. . The article stated that there are those graduating that are completely clueless as to even try to attempt a project. Home Depot is concerned very much about their business model of selling products to homeowners of the future.
greenskeeper59 they should be concerned that there will be no future home owners only landlords.
Is it the millennials fault for not understanding simple mechanics? I think before saying a statement like that first question who taught generations in the past how to do such simple mechanics to new and upcoming generations. Ignorance is Strength
Who would've guessed that when you take away negative consequences for bad behavior everyone starts participating in bad behavior?
Saying they are forcing people that didn't pay for college to pay for college is disingenuous. I pay taxes for roads I will never drive on, Firemen that will never save my life, and a politician that will likely never vote in my best interest. Also college cost is not high because more people are going. They are high because there is no risk in the loans . Colleges are admin heaving coaches and administrators are making millions instead of spending the money to improve quality of education.
I see the point your trying to make, but I feel like it's a little off.
Assuming you DO drive at all, you can assume you’re paying for those roads that you do drive. It’s a shared effort. Sure, not EVERY road in your municipality, but that’d be getting too granular (ie, you can’t pick to pay for a specific subset of roads. You chip in to pay for all of them in your area.)
I feel like the firemen is a bad example. You could, in essence, consider that insurance. They WILL come, do their best to save you, and put out the fire if you ever need it.
Otherwise you could make the case, “Why pay for insurance? I ‘may’ never need it.” Sure, but you’re paying for the “what if?”. You have equal access to the fire department just as everyone else.
Education is different. It’s a specific and personal thing. I don’t benefit from your degree. You do. You get payment and compensation from your job and education that prepared you for it.
It's not disingenuous. Everyone is taxed to subsidize college. Those who go to college benefit from the subsidization. The only people who are left at a net loss from the taxation are those who don't go to college.
Even the people that never go to college make use of services provided by people that go to college so your point is mute. Joe the plumber needs a lawyer that lawyer went to college. His daughter needs braces well the orthodontist went to college. Everyone benefits from the net influx of skilled workers. Mind you some of the more pointless degrees need to be done away with and or be made minors and not majors.
Joe the plumber also pays the lawyer upon usage. Her daughter also pays for the orthodontist upon usage.
So they pay twice, even if later getting the service for free through goverment something, their taxes are funding their wages.
lol not they are all including the lawyer and plumber paying into the system that allows for them to get the education that allows them to provide the service. When the plumber hires the lawyer he then pays that lone lawyer directly for his or her service. Everyone pays toward the infrastructure to expect otherwise is untenable. Each person would have to be their own sovereign nation paying into only what they care about. Lets say we did that. You wanted to take route 12 to work but not enough people cared about it to pay taxes on that one specific patch of road, well sucks for you. Get the money together to maintain the road yourself I guess. Same for fire department equipment and utilities. Why would I want to pay to pipe water to your house and then pipe it to mine? Or anyone elses house. Also all the tax dollars you pay on your own would not even come close to covering what you make use of in terms of government funded entities. We are all in this together no one including you have made it to where you are without the help of someone else tax dollars.
This is my favorite video from Davies.
Public school is not about education but indoctrination, as it is based on the Prushan model, designed specifically for that purpose.
Spell check please. Prussian is the word; former country part of Germany.
I love these videos! Thanks for the information.
82 viewers have so much debt they will go bankrupt.
I have finally watched the whole playlist, and I've learnt alot. now looking for more elsewhere. Thank you to Learn Liberty and Prof. Davies!
Dude, the base problem and reason the college boards are called greedy is they are. Right now. Your (in north america) tuition fees are ridiculously high and usually without a valid reason(especially in the US). Your schooling system is for profit. And there in lies the problem. All the rest is an effort to counter the greed of already wealthy people.
well it is expensive bcz there are too many ppl going to college and the ppl going to college are willing to go into debt to do it just take govt out and see what happens to tuition fees in a couple of years they will prob be slashed to 10 grand or less
This makes the case that people in govt are responsible for their actions but those in the private sector are not.
“The cost of the college education is artificially low.” LMAO!!!
stb357 access to student loans is so easy. That’s what he means. There is no upfront cost.
Another factor that I think is going to play a role in the bankruptcy of small colleges, is that when the bubble bursts and HS students cease going to college due to the unpayable debt, I think...and we're seeing some of this now...the political atmosphere on many college campuses is going to further contribute to the enrollment declines.
What if real estate and education organizations hire lobbyists in Washington to manipulate these laws?
Too late, they already have. Why do you think home ownership and a college degree are considered middle class pursuits?
Why do you have to use words to make it sound sweeter when you say something bad? loobying is coruption that's what it is, maybe if you would call it what it is you americans wouldn't be so confused.
This is why we need the Constitutional to say the government isn't allowed to do all this crap. Oh, wait, it already does in the 10th amendment, which says that the federal gov. is not allowed to do anything not specifically allowed by the Constitution.
+annonym surfer
No, lobbying is only corruption when an entity lobbies to get something from the government (e.g., subsidies). Lobbying to keep the government _from_ intervening is not corruption.
+BladeOfLight16 keep telling yourself that mate, lobbying is corruption doesn't matter what's the end result. At the end of the day nobody will spend millions and billions on politicians without having in mind the well being or a positive result for themselves, which means the ones that spend that money always benefit from it.
annonym surfer, everybody lobbies though. If you call your congressman and state your position on something you are lobbying for a change. It would be quite difficult to legally separate wealthier lobbying (flying to Washington to do the lobbying) versus cheaper lobbying (calling your representatives).
thanks Prof. never had much interest in economics but your lecture's make learning fun{ny} money>>>>>
dude just compared mortgage backed securities to chip wood in construction. not good
In what way was it not good? I mean, sure, no analogy is perfect, but it made his point well enough: you can't create an investment fund out of just a single mortgage.
Don't know about college loans, but lived through housing crisis. Was told that government wanted everyone to own a house and if you didn't approve a loan to a poor unqualified applicant you were evil or a racist. So you lended to people that you knew would never pay back the loan, but that was the government problem since they were insuring the loan.
This is great. Actual economic education for the masses. This information is not only not taught to our students it's discouraged. Now do a lecture on the Laffer curve and tax policy. That should be amusing and educational as well. Thanks for this.
Go to community college for two years, and then (if you REALLY NEED the Bachelor's) transfer to a regionally-accredited online college and get your degree part-time. Not only is this cheaper than full time, it would allow you to get a job and "pay as you go". Who knows? Maybe your employer offers tuition reimbursement, saving you even more money.
I worked at a high school and this is the path I suggested to graduating seniors. In California, you actually get two years of free community college. You'd think we'd have a line out the door for an offer like this. Hardly. Kids want "name brand" education, with NCAA D1 sports, all-you-can-eat dining halls, swimming pools with lazy rivers, etc. They turn up their nose at "store brand" community college, even though it's cheaper and class sizes are smaller, because "all of my friends are going to X University" or "what will the Joneses say?"
Once they graduate from these fancy schools and can't pay back the loans, graduates blame everyone (Congress, lenders, etc.) EXCEPT the university.
College is a waste of time and money for 80% of people. After high school (even during high school) kids should get a job, any job that will pay them for their time. Find out what they like and what they’re good at. Find a hole in the market and look at starting their own business. Then, maybe look at college if they want some business classes, but most things can be learned online, for a much smaller fee. All high school and college does anymore is turn kids into corporate worker bees. We have lost that entrepreneurial spirit that was once a part of the American dream
Wow, that was the best explanation on the housing bubble I’ve heard.
Good simple video to provide a concise overview.
Quick thing here, the federal reserve is a private company not government. 2 the market crashed because the banks gave out low but adjustable interest loans, then jacked up the interest and the payments.
yes. always a scheme behind these things. Hide it in the agreement that nobody is gonna sit 5 hrs in a signing chair to read.
Colleges also encourage students to take out loans to live on while in school.
@14:10 he says 1 trillion, the video is 1 year old and now its over 1.5 trillion, I wonder if its a bubble
Dude, I've been saying a lot of this shit for years. I'm glad I can send a link of this video to folks to explain it all more clearly than I can.
It's 2022 and this shit is shockingly accurate. I have been trying to buy a house and it flat out isn't happening. Out bid every single time. The costs of houses are skyrocketing and the rent I have to pay is ridiculously high. I honestly don't know what to do
Another serious flaw with these securities is that they create tiny little pieces out of actual real property that is not fungible in that sort of way. When you end up with difficulties like foreclosure or heaven forbid someone pays off their mortgage and wants the deed to their property the chain of title can become a huge mess. Who actually owns what can become a horrible ball of string. This securitzing of mortgages should never have been allowed. There have been numerous incidents where banks were unable to prove that they even had clear title to a property when they went to foreclose. Then what?
What a wonderful set of videos. Thank you Prof. Antony Davies
How to make sure that college education is still afordable to everyone given the necesarry talent and it does not become a privilege of those born rich.
How to make sure that majors which generally offer lower returns are not becoming a privilege?