Ticking Time Bomb:Student debt increasing 2800 every second

Ticking Time Bomb:Student debt increasing 2800 every second

The clock below shows you Ticking Time Bomb:Student debt increasing 2800 every second

Student debt is a time bomb waiting to explode. It stands at $1.3 trillion and is growing roughly at a rate of $2,800 every second.  As of June 2015, 11.5% of the debt was delinquent for at least 90 days according to Bloomberg.  40 million American now are carrying some form of student loans. 70% of college students graduate with debt and they are not guaranteed of landing a job upon graduation.  The department of education has stated that the by 2025 this debt is set to surge to almost$2.5 trillion.  A massive default here will make the financial crisis of 2008 appear to be a walk in the park.

The government continues to suggest that the economy is improving; if it is really improving then when are so many individuals  falling back on their student debt payments. Right now roughly 11% of individuals with student debt are 90 days late on their payments and the situation is going to get worse with the passage of time. [/color-box]

The most recent jobs numbers masked a dark story. Unemployment held steady at 5.1%, but only 59.2% of Americans have a job. The difference is the unemployment rate only counts people who don’t have a job and are actively looking for one. The labor force participation rate is perhaps a more accurate gauge of the economy. It includes people who’ve given up, don’t want to, or can’t work, and it fell to 62.4% last quarter Full story

Based on the numbers above, the economy should be in tatters and people should be rioting. Instead, all appears calm; the masses suffer silently and lay the blame on forces they claim to have no power over. As long as they take this approach that is exactly how things will play out. According to shadow stats, the real unemployment rate as of Dec 2015 is almost 23%.  This is not  a picture of an improving economy.

This is the real reason the Fed decided to raise rates by a paltry 0.25% and took forever to do so. While many call the Fed stupid and short-sighted; the truth is that at every twist and turn of the road, they have walked away unscathed. While the gold bugs wait for their day in glory (many have already passed away waiting for that day to materialize), they do not understand that even if Gold moves to 10,000 which it will not, the Fed has, is and will still win the game. What does it matter if Gold moves to $100K; if you control the printing press, you just push the pedal to the metal and print a lot more and problem solved.


Game Plan 

The Fed’s policy favours speculators and punishes savers. In this environment the best strategy is to use strong market pullbacks to open positions in stocks that are growing at fast pace,  and or solid blue chip companies that have a track record of delivering consistent results over the years. Companies that are experiencing fast growth rates are AMZN, NFLX, CALM, etc. Some blue chip names are COST, MCD, RTN, etc.

Other stories of interest:

Fed raised rates & bonds Rally as predicted (Feb 3)

7 Reasons America’s Economic Recovery Is Not Real  (Feb 1)

Stock Market Bears Slaughtered as Dow Mounts stunning rally (Jan 30)

Stock Market Crash, Dejavu 1987 or Bullish Buying opportunity  (Jan 27)

Crude oil price projections: will oil prices stabilise or continue dropping (Jan 25)