There’s another fiscal crisis that you might not be as aware of in comparison to the Fiscal Cliff, and another likely debt ceiling showdown on the way; the student loan debt bubble. According to MarketWatch, total student debt outstanding surpassed $1 trillion for the first time last year, and new data released today shows that 11 percent of student loans were 90 days or more past due in the third quarter. That’s a 8.9 percent climb from the previous quarter according to the Federal Reserve Bank of New York.
Student loan debt has surpassed nearly all other consumer debts in this country, and much of that largely government subsidized debt will almost certainly end in default. Keeping in mind what many experts believe, in that the housing bubble led to massive defaults, subsequent bailouts and spending, and the 2008 fiscal crisis; should eyes now be on the student debt bubble with the same focus as the Fiscal Cliff?
On “Real News” Friday the panel opened the show looking at the student loan debt bubble and its place in very recent historical context. Are we going to end up right back where we are now because of this growing source of debt, or can we avoid another 2008 crisis? Watch a clip below:
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Comments (61)
CapitalismWorks
Dec. 1, 2012 at 10:57amMy Bachelor’s Degree with a major in Finance (’94) and my Master’s Degree with a major in Management Information Systems (’97) are both now stored in a closet somewhere. For my boatloads of money and countless hours of hard work I was “awarded” 2 worthless pieces of paper.
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turkey13
Dec. 1, 2012 at 11:34amMy sons have a college degree but only because we forced them to get it. They have their own construction company have 3 employees that have degrees. These people couldn’t get a job anywhere and went to the votech and learned how to run a backhoe. My sons used them as ditch diggers where you had to use a shovel and they tuffed it out. They are now making $18.00 an hour and since my sons are non union they have all the work they can handel (the bids are lower). As a result these folks can work all the overtime they want. The woman just bought a Ford Raptor Pickup that cost almost $50,000.
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smokie
Dec. 2, 2012 at 12:57pmI’ve got you all beat- I’ve got an anthropology degree. Anyone who watches “Archer” know my viewpoint on it. The shadow said what I’ve been saying for years. anthropology is a self perpetuating disease, not a profession.
It’s the most worthless/valuable paper I have. Worthless because there’s no real jobs for anthropologists besides teaching anthropology, and valuable because I learned the true nature of liberalism. Their credo is ‘never enough’. They suck the blood out of anyone useful and driven, then go onto the next.
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wadajada
Dec. 2, 2012 at 9:17pmUmmm…Nope I have a better story…My brother took out over $100,000 in loans to go to law school…..12 yerars ago…..When he was done being a prof student…… yikes he realized he had to get a ????JOB…..He worked in law for maybe a year total….Being a lawyer and all, he claimed bankruptcy….Yes he did and this was about 8 years ago and they never came after him???? I don’t get it???? Oh wait it gets better he took out a mortage 6 years ago in his wifes name…Bank Of America…still gets better, they never foreclosed on the house….still gets better, he move away last year and is now renting out the house out….I kid you not!!!!!
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EastTexas
Dec. 1, 2012 at 9:06amWell I never dreamed my Degrees in Poly sci/ African studies would not find me a job, ………Not!
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antann
Dec. 1, 2012 at 8:57amMy adult child studied hard and got great grades in an accredited Christian University. They didn’t waste time indoctrinating their students. They had very high standards, and expected to see those standards reflected when the students took their GRE. Most students tested in the top 20%. They addressed the college party mentality through very stiff fines for breaking rules. Caught with alcohol on campus first time $500, second time $1500, third time $3500, after that a psychiatric evaluation is required to stay because no one in their right mind would spend that much money for a drink. If caught with recreational drugs the police were called and student expelled with no opportunity to return.
Four years later my adult child got a job making minimum wage. Three years later same child has proven his worth and is making $60,000+. He knew what to do with an open opportunity even when it started out small.
He is surprised how many of his peers from secular colleges do not know spelling or grammar. He is surprised at their poor communication skills. He is surprised at their poor work ethic.
Maybe part of the answer is stop choosing big name schools that produce poor results.
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MY BEAR58
Dec. 1, 2012 at 9:38amAntann, i have to agree with you 110%. Parents need to start sending their children to schools that makes them responsible for their actions and lifes.
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fr0thing
Dec. 2, 2012 at 12:54amWhat was the name of the Christian university your child attended? I’m gathering names of potential colleges for my child.
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dublinthewagons
Dec. 1, 2012 at 7:50amAh the good old days. When you worked your way thru college or didn’t go. Gives you a sence of appreciation. It will also keep the prices down.
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orionreplay6607
Dec. 1, 2012 at 5:42amMy sister in law has high 2 figures of college debt acquired from years upon years spent in school as a “professional student” eventually earning some degree in law, yet today doesn’t work in law. She has repeatedly said she hopes Obama “forgives” her student loans, so she can move on with life with my brother and have a clean slate. She pays her on loans when pressured enough, but mostly ignores the over due notices.
No one held a gun to her head to take the loans she so quickly signed off on years ago to keep her in school. At young adult age, she agreed to so much debt, she could have bought a small home instead and actually have something to physically hold. Instead she eventually got a degree and doesn’t even work in that field. She never even tried. She was offered work by a small business friend in the “trendy” part of town and does that to this day.
Meanwhile, I had mid-2 figure debt from university and it took me close to 15 years to pay it off. I worked a job, sometimes two jobs, stressing myself out knowing I had to make my payments. It was my obligation. I eventually joined the Navy three years after graduation to secure a better paycheck than I had been getting. I paid off all the loans.
She doesn’t even try. She just wants the loans “forgiven” so she claims she can start life over. I don’t understand that mentality. You got exactly what you wanted and now expect someone to step in a rid you of that debt, penalty free?
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Fla Del
Dec. 2, 2012 at 1:31amThat is the difference between an ADULT and a CHILD.
Growing up is work. Congratulations on being an adult.
You will be blessed.
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orionreplay6607
Jan. 12, 2013 at 4:44amFLA DEL- you are right. And with Obamacare allowing young adults to stay on their parents’ healthcare upwards of 26 years old now, it seems they are no longer even ‘young adults’ any longer. They are ‘older teens’. They have no responsibility any longer.
My dad told me when I got removed from his healthcare, you either find a job that has it or you take your chances. I was forced to grow up and stop working minimum wage jobs, hoping for my summer’s off still.
These yahoos today act like they are unique in the problems: school debt, no jobs, no healthcare. BUT WE ALL HAD IT and we all grew up to survive.
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Chet Hempstead
Dec. 1, 2012 at 1:54amYou mean there are people who pay back student loans? Things have sure changed since I was a kid. Back then you would just move as soon as you got out of college and forget all about it. If you had a weird name that there wouldn’t be a lot of other people with, you might have to change it and start using your middle name as your first name. We just figured that the first loan to somebody with no credit rating was a freebie, and we could just hit reset and start our real credit history after we got a real job.
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sbenard
Dec. 1, 2012 at 1:10amZero Hedge has been reporting on this student loan for a few months now. What’s worse, student loans can’t be eliminated in a bankruptcy.
But THE Mother of all Bubbles is still the US Government debt bubble. By the end of this decade, we will be paying $1 trillion/year in interest alone, about HALF of all income tax revenue! When that bubble pops, it will mean economic armaggedon. The world will end as we have known it! We will see a depression that will be known as the GREATEST Depression.
The leading expert on the subject is John Mauldin, who wrote the book “Endgame” on the subject. He said this past spring that he believes we will hit the debt brick wall in 2013 or 2014 — within the next 12 to 24 months. Kyle Bass thinks it will happen even sooner!
Calamity is certainty! Plan and prepare accordingly!
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WeatherTheStorm
Nov. 30, 2012 at 11:31pmI take full responsibility for my actions, and with 3 (4 next year) kids in college, I never thought I’d have trouble paying their plus loans. My wife and I both lost our good paying jobs and benefits, and until this year, we made enough money so that we didn’t get many grants. Now we’re at the point where our kids are near graduation, job prospects a question mark, minimum wage jobs for us. We are looking at over $50,000 in Parent Plus loans. We have already raided most of our retirement funds to pay for medical issues and paychecks that don’t even cover our monthly expenses. I’d pay it if I could, but I know we’re going to default unless we are blessed with better jobs, which we are actively pursuing. I’m sure I’m not the only one in this position. I’m a conservative, and know what I’m saying goes against my limited government thought process, but there needs to be some kind of relief for people in my position and those kids who can’t find a job after graduation, or there are going to be a lot of people in jail for not paying their student loans.
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WarMunger_Al
Dec. 1, 2012 at 12:01amShould have had the kids go into the National guard, then the could have earned the gi bill. College for the most part is a waste of money. Over inflated costs and most “degrees’ do not translate into jobs and money earned. Unless maybe nursing degrees or some IT studies.
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betterpart
Dec. 1, 2012 at 4:53amGotta agree with warmunger. Military personnel have many of their needs addressed plus have the honor and privilege of defending their country.
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antann
Dec. 1, 2012 at 8:22amOr tell your kids that a degree helps with the glass ceiling later in their career, but they still need to start on the bottom. If they choose a company with a higher education benefits, take maximum course load for their masters while working full time, they will be able to defer their debt until their income catches up through hard work and promotions.
I know young adults doing this and are now comfortably paying off their student loans. It took 2-3 years for them to get in a better position, but they got there without the governments intervention. They own their problem and obligations and worked out a responsible solution.
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DIgnified
Nov. 30, 2012 at 11:18pmOh yeah student loans are the problem. Not GS selling subprime again. Ignore that, whatever you do.
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blazingaway
Nov. 30, 2012 at 9:48pmIt’s all a load of crap ….
Schools raise the cost because of the money available and the fact that the schools are not responsible for producing a product or service of value. It’s another assembly line mentality.
If schools were on the hook for the loans being repaid, then and only then will they produce a produce of value capable of earning a living and producing value. As it is they produce crap, that can’t earn crap and only produces more crap that society is expected to pay for. They are all rip-off artist and couldn’t give a damn about anything but the money. AND, NO ONE GET”s IT! Which is why this will implode when the people enslaved by these loans revolt and the law is changed and the investors loose or the government turns these unemployed dumb ass students into “brown shirts” to eliminate the old and cost of medicare and medicare and social security debts
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MeMadMax
Nov. 30, 2012 at 9:00pmIt’s because they go to school in the hopes of getting a different/better job then get out and find there is no jobs…
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antann
Dec. 1, 2012 at 8:26amOr they don’t realize a college education helps with the glass ceiling not the bottom floor. Most graduates start at the bottom with most everyone else, but they have an opportunity to move through a system faster and go higher with the extra knowledge IF they work hard to get there.
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historyguy48
Nov. 30, 2012 at 8:56pmThe entire banking system currently in use, along with the debt based monetary system, is nothing but a scam anyway.
America’s debt is in the $134-164 trillion range, more money than exists in the entire world.
Derivative betting alone is in the $640-1000 trillion range, and there is always a winner and a loser, which is more money than every asset on this planet is worth, actually several times what they are worth.
As expected the current financial system is about to run into the immovable fiscal wall and will then collapse. Why do you think the bankers have been pushing the soon to be announced (December) One World Government and the One World Currency?
Simple, this way they can keep the entire world as their debt slaves.
Read Ellen Browns book “Web of Debt…” Learn the truth about money and our banking system and how easily we could repair this mess. Of course, Dear Leaders principle task is to make sure we do not repair this mess.
Read Nathan Hales excellent novel “Death of Civilization; the Apocalypse Begins” and find out what will probably happen if they lose control of the collapse and why they are treading so very carefully while collapsing the dollar.
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barber2
Nov. 30, 2012 at 8:24pmWhen personal responsibility is no longer a value, the society fails. Guess what ? Guess who has fostered this lack of responsibility ? The Blame Gamers….
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Ruckus_Tom
Dec. 2, 2012 at 10:10amSomeone else posted this before but I thought it fits in quite nicely for summing up our current state of affairs:
Edward Gibbon, British MP and historian back in the 1700´s, on the fall of Athens:
“In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all – security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility then Athens ceased to be free and was never free again.”
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calmandcents
Nov. 30, 2012 at 8:09pmFor an excellent discussion of academia in America, please see Discover the Networks:
http://www.discoverthenetworks.org/guideDesc.asp?type=aca
To understand what’s going on and how we got here, please also see “The Cloward-Piven Strategy”:
http://www.discoverthenetworks.org/Articles/theclowardpivenstrategypoe.html
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calmandcents
Nov. 30, 2012 at 8:26pmActually, it should be “The Cloward-Piven-Obama Strategy.”
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The-Monk
Nov. 30, 2012 at 9:15pm@Calmandcents
Don’t forget Bill Clinton…..
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noslave
Nov. 30, 2012 at 8:02pmlike folks who buy cars and let them go back(reposession),the students mentality is the same no intension to pay,an old friend who died used some of the loan to buy a car??obama will pick up the tab(at taxpayers expense)since he promised them if they vote for him??but the stupid,zzz dont care or realize if obama picks up the bill,the college professors will want a raise ( its easy money the govt will pay??)so the college will raise its rates??i will be never ending,nobody loses except the cashcow taxpayers.
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nomemymine
Nov. 30, 2012 at 7:58pmFeel sorry for the kids.
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Bonnieblue2A
Nov. 30, 2012 at 8:09pmWhy? What does that solve? The costs of education in this country are driven up by the government student loan programs and the tenure program for teachers. Get the federal government out of funding loans period, be they student or mortgage, and you will see market forces drive down the costs of both education and home ownership.
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soybomb315_II
Nov. 30, 2012 at 8:52pmBonnie many republicans do not understand it because just a few weeks ago, they voted for the guy (Romney) who said he wanted to increase college education funding
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crackerone
Nov. 30, 2012 at 9:12pmI feel sorry for the grandkids!
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Netsurfer2
Nov. 30, 2012 at 10:01pmMaybe we should be teaching our children more Math, Science, Physics and Chemistry subjects than game development, art and other subjects that really have no technical impact on developmental aptitude? We have taught our children to take the easy way out by less responsible means! What makes you think anything will change if we don’t get them on track for what the future calls for? Why are we funding people into educational subject that do not have a strong need in our society?
Bill Gates with all due respect imported people from India to fill Technical positions only because we do not have very many perusing such educational standards! They thrive while our young keep getting set back in educational standards! The family unit is not only broken, but the principles are lost without realistic goals in educational standards! Teachers push their agendas and teach the subjects in Liberal fashions while ignoring the meat of the subjects that increase technical skills and abilities! The whole college systems need to be overhauled completely! There needs to be a competitiveness in teaching with proven attributes that bring on competent learning abilities! Our children are being left behind!
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Bonnieblue2A
Nov. 30, 2012 at 7:56pmActually, anyone who has been paying attention to the economy has been watching the student loan bubble. Peter Schiff has been talking about it for more than a year.
http://lewrockwell.com/schiff/schiff139.html
So, it is about time that Real News got caught up on what most of us understand as old news.
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Snowleopard {gallery of cat folks}
Nov. 30, 2012 at 7:58pmAnd Obama will use this bubble to further entrench the students into the Democratic party by a mass forgiveness of the loans to all who vote democratic.
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barber2
Nov. 30, 2012 at 8:08pmToo bad that the rest of America, and the Lefty MSM, are not only aware of this bubble, but aren’t screaming loudly about the effect this will have on our already Obama- frazzled economy. This is the next” affordable housing ” time bomb. Walking away from debt, of any type, is now as acceptable as targeting old, rich, white conservatives in the New Obama Far Left America . A bunch of losers and blamers who have no responsibility for any bad decision they make. Sad and disastrous . BUT one heck of a way to crash the entire economy which is just what the international Far Left Obama , anti-capitalist people plan to accomplish. How sad the Republicans did not deal with the ” anti-capitalist” issue and total damage Obama’s political philosophy would do to our economy.
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barber2
Nov. 30, 2012 at 8:14pmSNOW: Obama’s divisive populism at its best. Obama is our Chavez. The Pied Piper of the young , especially the angry, outsider young. Obama has been dividing our country and pitting the naive / angry young against the their elders and against traditional American values. Hard to believe , but then there are so many aimless, single parent young out there. And with the previous four failing economic years under Obama, there are even more of these kids than before.
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ares338
Nov. 30, 2012 at 7:49pmWell if they would get their degrees in something besides French Art of the 1300′s they could get a job. Hey….I hear Micky D’s is hiring.
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socialism.rocks
Nov. 30, 2012 at 8:49pmmicky d’s is going to be unionized and they will be paid-atleast double which they are not
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ScottG-CO
Nov. 30, 2012 at 8:58pmRIGHT! Best advice I ever heard ‘pick your major out of the yellow pages’ and he was SOOOO right!
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taxpro4u03
Dec. 1, 2012 at 3:11amMickey D’s etc will ‘soon’ require a ‘food handler’s license –’ — BET on it… which will simply ‘transfer’ fiat dollars ‘back’ into the cycle, while eliminating the ability to ‘work.’ — walk your board today? The republic requires energy transfer it to ‘justify’ your existence… ;-)
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calmandcents
Nov. 30, 2012 at 7:46pmA college education in America is generally good for only two things: a useless public service position and/or a vote.
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quiltgal
Nov. 30, 2012 at 7:38pmI sense another bailout coming–this one will involve forgiveness of student loans. Young people have been duped into spending thousands of dollars for bogus college educations that are not worth a dime. It’s all OK, of course. Government encouraged it and probably never expected to get paid back. Students think they are entitled. Who really wants to work anyway.
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drs1969
Nov. 30, 2012 at 8:42pmThe loans were given to buy votes. Thanks to bankruptcy laws, they aren’t dischargable. This is enslavement by another name.
There doesn’t have to be forgiveness, since the gov. is carrying the loan. Just like the Federal Reserve doesn’t have to make a profit on all that Toxic Debt they purchased from the banks. It was paid for thru the ‘inflation tax’ that was created when that money was credited to the banks’, or in this case, the students’ accounts. We, taxpayers have already paid for those loans thru higher prices. It was all about propping up the big banks.
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John 1776
Nov. 30, 2012 at 7:36pmThe intent is for it to collapse!
It has been the progressive plan to make higher education a “right” as compared to something to aspire to. That is why the government took over the student loan industry. They will wash out the debt (chuck it on the national debt pile) and burn a few bankers in the process. (a win-win for the progressives.) After that, the government will simply pay for higher education, but it will be controlled by the government. Now, here’s the good part- All those lefty rich professors will be tossed under the bus as the pay scale plummets, just like it is for doctors now. The exception will be the super-endowed elitist schools that the elites will still be able to afford.
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calmandcents
Nov. 30, 2012 at 7:24pmSince today’s college graduates — assuming that they have graduated — aren’t really educated beyond subversive social indoctrination programs, in all likelihood, they justifiably aren’t intelligent enough to understand concepts of borrowing and repaying or exchanging money for things of value. I’ve no doubts but the entire student loan debt will be “excused” from the shoulders and minds(?) of the occupy generation. AS ALWAYS, someone else will take care of them. They have much to be proud of!
It smells like war in the air.
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progressiveslayer
Nov. 30, 2012 at 7:19pmProgressives caused the housing meltdown so now they’ll do their best to bankrupt us because you have a ‘right’ to a college education and somebody else ie the taxpayer will pay for it. They took out a loan but most default so the taxpayer is left holding the bag.This is the problem when government is involved,loan to anyone regardless of credit because hey it’s the ‘government’ who’ll do the bailing out when the inevitable default occurs,problem is like always the taxpayers are screwed.
The sooner the government is out of the student loan business the better because if they stay in an area where they have no business being the system will never work,just like the housing market.
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soybomb315_II
Nov. 30, 2012 at 7:15pmfrom here out – all bubbles will be debt bubbles
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My Two Cents
Nov. 30, 2012 at 7:34pmSeems like they have morphed into Hindenburgs as opposed to bubbles.
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johnpaulkuchtajr
Nov. 30, 2012 at 7:13pmGraduating students face a double whammy of a slumping job market and higher prices for everything.
They graduate and go back to live in their parents’ basements; but, if we have another terrible dip in the economy, where are their parents going to go live?
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progressiveslayer
Nov. 30, 2012 at 7:27pmIt’s been one crisis after another since the POS was inflicted on us,weird huh? I’ve maintained from the beginning of this walking disasters reign that his intention is to destroy our economy and he’s doing it.
No budget since he was installed? That’s never happened before in our history. Socialized medicine and his war on the coal industry? No,we’re dealing with a committed Marxist anti-colonialist POS bent on reducing our standard of living to that of a third world country. I know a ranted on but I know what he’s doing and I’m just enraged,sorry for ranting on.
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johnpaulkuchtajr
Dec. 1, 2012 at 7:07amHey Slayer,
Rants from guys like us are what will eventually turn this great ship around!
Do you ever get the feeling that we might just be “too few, too late?”
“Remember Benghazi”
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progressiveslayer
Dec. 1, 2012 at 9:10amJohn,
I’m afraid it’s too late for a whole host of reasons but one that sticks out is the health care law because socialized medicine will bankrupt us. Call me crazy but I believe Barry is following Alinsky tactics to a T and I believe he’s trying to destroy our economy on purpose. Barry studied Alinsky in college and he’s using the Cloward & Piven strategy of collapsing the system and rebooting,but with what? I’m thinking communism. Benghazi should be enough to bring him down but our congress is filled with cowards,that’s the only conclusion I can come to.
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