As the number of people taking out government-backed student loans has exploded, so has the number who have fallen at least 12 months behind in making payments — about 5.9 million people nationwide, up about a third in the last five years.
In all, nearly one in every six borrowers with a loan balance is in default. The amount of defaulted loans — $76 billion — is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities, according to a survey of state education officials.
In an attempt to recover money on the defaulted loans, the Education Department paid more than $1.4 billion last fiscal year to collection agencies and other groups to hunt down defaulters.
Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms. Ms. Cordeiro has already had two tax refunds seized, and other debtors have had their paychecks or Social Security payments garnisheed. Over all, the government recoups about 80 cents for every dollar that goes into default — an astounding rate, considering most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards.
There is no statute of limitations on collecting federally guaranteed student loans, unlike credit cards and mortgages, and Congress has made it difficult for borrowers to wipe out the debt through bankruptcy. Only a small fraction of defaulters even tries.
“You are going to pay it, or you are going to die with it,” said John Ulzheimer, president of consumer education at SmartCredit.com, a credit monitoring service.
With jobs data coming out tomorrow, let's take a look at the current situation in New York, the country's second most populous state.
Here is a chart courtesy of Tim Wallace.
New York State Employment Situation
The chart shows second quarter data from 2012 vs. prior years. In table form, New York employment looks like this.
Wallace Writes ...
Recently we have heard how great the city of New York is doing employment wise.
Suffice it to say if the city of New York is doing so wonderfully, the rest of the state must be hurting for certain.
The data you are going to see on these charts is the foundation for the quarterly covered report. As you are aware covered employees are those with unemployment benefits. A high percentage of workers without benefits are self-employed.
In this chart you will clearly see the impact of both the 2001/2 recession and the more recent recession. The black line is the total unemployed, not just those covered by insurance.
For the past four years, New York State unemployment has remained well above the numbers leading into the recession, and in fact 45.8% on average higher than the 2001/2 recession impact.
Thus, I cannot see where the "recovery" is. In fact, 2012 is the worst year in history for New York.
The red line shows the New York Civilian Work Force, which as you can see has mostly historically trended up, until the Obama presidency.
Since then the trend is downhill, with the workforce now back to levels of 2008, while unemployment is twice the level of 2008. Is this truly a "recovery" and "change" that you can live with?
The blue line shows the number of people actually covered by the state level unemployment insurance. As those benefits ran out, covered employment crashed to a level actually below 2001.
2012 covered employee numbers are below the level in 200, in spite of a huge increase in population. Clearly there has been no recovery in benefits producing jobs.
Self-employed are not covered by unemployment insurance.
The "self-employed" group includes all of those selling trinkets on Ebay as a job as well as all of those "working" in their multi-level marketing "business". Others struggle as non-covered employees in family related businesses.
Many of those jobs are not "real" and produce little or no income. However, these people are counted in the workforce if they respond to the BLS in the household survey that they "worked" any hours.
Quick Stats 2001 vs. 2012
In 2001 there were 8,515,000 New Yorkers covered by unemployment benefits. Now there are 8,477,000.
In the same time frame, the work force has grown from 8,929,000 to 9,562,000 while unemployment rose from 364,200 to 824,000.
Mike "Mish" Shedlock
Manufacturing Returns Without the Jobs
Paul Sakuma/Associated Press
While the many robots in auto factories typically perform only one function, in the new Tesla factory in Fremont, Calif., a robot might do up to four: welding, riveting, bonding and installing a component.
At the Philips Electronics factory on the coast of China, hundreds of workers use their hands and specialized tools to assemble electric shavers. That is the old way.
At a sister factory here in the Dutch countryside, 128 robot arms do the same work with yoga-like flexibility. Video cameras guide them through feats well beyond the capability of the most dexterous human.
One robot arm endlessly forms three perfect bends in two connector wires and slips them into holes almost too small for the eye to see. The arms work so fast that they must be enclosed in glass cages to prevent the people supervising them from being injured. And they do it all without a coffee break — three shifts a day, 365 days a year.
All told, the factory here has several dozen workers per shift, about a tenth as many as the plant in the Chinese city of Zhuhai.
at Earthbound Farms in California, four newly installed robot arms with customized suction cups swiftly place clamshell containers of organic lettuce into shipping boxes. The robots move far faster than the people they replaced. Each robot replaces two to five workers at Earthbound, according to John Dulchinos, an engineer who is the chief executive at Adept Technology, a robot maker based in Pleasanton, Calif., that developed Earthbound’s system.
At an automation trade show last year in Chicago, Ron Potter, the director of robotics technology at an Atlanta consulting firm called Factory Automation Systems, offered attendees a spreadsheet to calculate how quickly robots would pay for themselves.
In one example, a robotic manufacturing system initially cost $250,000 and replaced two machine operators, each earning $50,000 a year. Over the 15-year life of the system, the machines yielded $3.5 million in labor and productivity savings.
One of the most interesting things about the graph above is that, if technology is the primary driver, then employment in China must inevitably follow the same path. In fact, there are good reasons to believe that manufacturing employment’s download slope will be significantly steeper for China. The U.S. had to invent the technology to make manufacturing more productive, while in many cases China only needs to import it from more developed nations. It is also true that China is beginning its journey at a time when information technology (which is the primary enabler of automation) is many orders of magnitude more advanced than in the 1950s when U.S. manufacturing employment was at its peak.Breast Cancer Diagnosis
In the U.S. (as well as in other advanced countries), workers shifted out of manufacturing and into the service sector — which now accounts for the vast majority of jobs. Will China be able to pull off the same transition?
In the absence of consumer spending, China’s economy remains highly dependent on manufacturing exports and, especially, on fixed investment. An astonishing 50% of China’s GDP is driven by investment in things like factories, housing and infrastructure (the U.S. figure is around 15%). The problem is that all that investment has to ultimately pay for itself, and that happens via consumption. Once a factory is built it has to then produce something that gets sold at a profit. Homes, retail buildings and apartment complexes likewise have to be sold or rented out. Obviously, no economy can indefinitely invest anything like 50% of its output without eventually finding a way to get a positive return on that investment.
Achieving that return requires consumers — either at home or abroad. China continues to rely heavily on consumers in the U.S. and Europe, but that’s unlikely to be a sustainable formula for growth. The debt crisis and the resulting austerity is cutting into economic growth and consumer spending in both Europe and the U.S.
The real problem China faces is that it is late to the party. Just as it reaches its manufacturing employment zenith, it faces a potentially disruptive impact from automation technology. And that will happen roughly in parallel with similar transitions in the service sectors of the countries that currently consume much of its output. In the face of that, can China succeed in re-balancing its economy toward consumption, increasing personal incomes, and building a vibrant service sector to keep its population employed?
Since 1928, tissue samples have been screened for breast cancer by hand. Pathologists examine the tumor under a microscope and, by measuring a handful of cellular features, can produce a fairly accurate diagnosis and prognosis for the patient. C-Path replaces the human looking down the microscope and uses computer vision to look for the same cancerous indicators. Furthermore — and this is what makes C-Path so accurate — by looking at a large number of human-diagnosed samples, the system learns.Robots to Replace Women
For example, one of the features that human doctors look for is the speed at which tumor cells divide by mitosis — through learning, C-Path might’ve discovered that mitosis isn’t actually the most accurate indicator.
Learning also allowed C-Path to discover new, cancer-related cellular factors — 6,642 in total — which it then used to diagnose and prognose new cancer patients with better accuracy than a human doctor. One of these indicators, related to the stroma (connective tissue between cells), was a completely new discovery — in other words, C-Path’s automated learning process just saved the lives of innumerable breast cancer patients around the world.
A new walking, talking robot from Japan has a female face that can smile and has trimmed down to 43 kilograms (95 pounds) to make a debut at a fashion show. But it still hasn't cleared safety standards required to share the catwalk with human models.That was written in 2009. By now I am quite confident they have improved upon the "rather ordinary" figure.
"Technologically, it hasn't reached that level," said Hirohisa Hirukawa, one of the robot's developers. "Even as a fashion model, people in the industry told us she was short and had a rather ordinary figure."
To add to the literal objectification of women, the robot will appear in the fashion show, naked, so that the public may come up with fun things the robot can do.
HRP-4C was designed to look like an average Japanese woman, although its silver-and-black body recalls a space suit. It will appear in a Tokyo fashion show — without any clothes — in a special section just for the robot next week.
The robotic framework for the HRP-4C, without the face and other coverings, will go on sale for about 20 million yen ($200,000) each, and its programming technology will be made public so other people can come up with fun moves for the robot, the scientists said.
The robot can apparently move enough of her body that human-robot sexual contact doesn't appear out of the question, and--just like a woman--she can show such emotions as "anger and surprise"
Last year GameChanger produced nearly 400,000 accounts of Little League games. This year that number is expected to top 1.5 million. And the articles don’t read like robots wrote them:Stats Monkey
Friona fell 10-8 to Boys Ranch in five innings on Monday at Friona despite racking up seven hits and eight runs. Friona was led by a flawless day at the dish by Hunter Sundre, who went 2-2 against Boys Ranch pitching. Sundre singled in the third inning and tripled in the fourth inning … Friona piled up the steals, swiping eight bags in all …
The grandparents of a Little Leaguer would find this game summary—available on the web even before the two teams finished shaking hands—as welcome as anything on the sports pages.
Sample story generated by SportsMonkey from April 25, 2009:Wikipedia Written by Robots
UNIVERSITY PARK — An outstanding effort by Willie Argo carried the Illini to an 11-5 victory over the Nittany Lions on Saturday at Medlar Field.
Argo blasted two home runs for Illinois. He went 3-4 in the game with five RBIs and two runs scored.
Illini starter Will Strack struggled, allowing five runs in six innings, but the bullpen allowed only no runs and the offense banged out 17 hits to pick up the slack and secure the victory for the Illini.
The Illini turned the game into a rout with four in the ninth inning.
Strack got the win for Illinois. It was his fourth victory of the season. Strack allowed five runs over 6 2/3 innings. Strack struck out two, walked three and surrendered six hits.
Mike Lorentson suffered his sixth loss of the season for Penn State. He went four innings, walked none, struck out two, and allowed six runs.
Illinois closer John Anderson got the final seven outs to record his second save of the season.
Hammond says StatsMonkey can do more than analyze Little League games.
"Our goal is to genuinely model human thought, intelligence, reason," he says. "I have to admit, we are doing it not only in sports; we're looking at what other realms we could apply this [technology] to."
Scholars studying Wikipedia tend to ignore or quickly dismiss the influence of bots on the site, even though of the top 30 most prolific editors on the site, 22 are bots. In fact, Wikipedia itself erases their contributions; according to Geiger, when a Wikipedia "user account is flagged as a bot, all edits made by that user disappear from lists of recent changes so that editors do not review them."Got that? Changes made by Wikipedia robots are automatically approved. Changes made by human editors need review. I have to ask: by computer robots or humans?
"We've had three consecutive months of declines in retail sales," says Shilling, president of A. Shilling & Co., an economic research and forecasting firm. "That's happened 29 times since they started collecting the data in 1947, and in 27 of the 29 we were either in a recession or within three months of it."Case for Recession
Shilling expects this recession will last about a year and shave about 3.5% from growth from peak to trough.
This time is different, says Shilling "because a lot of things that normally go down in a recession are already there, like housing." And policies that normally help revive the economy are absent. The Fed can't cut interest rates because they're already near zero and the housing market won't be a catalyst for growth, Shilling says.
Before the last presidential election Shilling said that whoever got elected then wouldn't get re-elected because the economy would still be weak with high unemployment.
Now Shilling says he'd like to see one party in control in Washington because it increases the odds of cuts for entitlements and could help "restore confidence in Washington." But even then he says it will take five to seven years to complete the deleveraging that's already underway before the economy recovers.
Would Another Round of QE Help?Timing the Recession
Everyone is looking for the Fed to do something.
I have to ask what good could it possibly do? Yield on the 10-year treasury is about 1.5%. Would it make any difference to businesses if it was 1.25% or even 1%?
I suggest additional monetary stimulus would not do anything to spur job creation and it would continue to punish those on fixed incomes.
An additional round of QE could ignite a further rally in equities (already in bubble land). However, one of these QE moves by the Fed will blow sky high, and with equities priced beyond perfection, the next round of QE may be the one.
Miami City Manager Johnny Martinez declared a state of financial urgency Friday for the fourth year in a row.Click on link for a video.
The move gives the city commission authority to restructure its existing contracts with police, general employee, and fire unions.
City commissioners agreed to not hike taxes in a budget meeting Thursday night, but instead will look to close a budget gap of tens of millions through union concessions. The $485 million budget must be balanced by September.
"The unions are not cooperating with the process," Mayor Tomas Regalado told the Miami Herald. "We need to have a balanced budget."
Martinez said in a statement that the city will be contacting union representatives to start up two weeks of negotiations. The declaration of urgency has likely incensed police and fire officials; according to Reuters, the latter group argued before city officials Thursday night that their pay has been cut 35 percent in the last 3 years already.
From the street, the two decomposing bodies were nearly invisible, concealed in an overgrown lot alongside worn-out car tires and a moldy sofa. The teenagers had been shot, stripped to their underwear and left on a deserted block.How Pensions Crashed Stockton, San Bernardino
They were just the latest victims of foul play whose remains went undiscovered for days after being hidden deep inside Detroit's vast urban wilderness - a crumbling wasteland rarely visited by outsiders and infrequently patrolled by police.
Abandoned and neglected parts of the city are quickly becoming dumping grounds for the dead - at least a dozen bodies in 12 months' time. And authorities acknowledge there's little they can do.
The bodies have been purposely hidden or discarded in alleys, fields, vacant houses, abandoned garages and even a canal. Seven of the victims are believed to have been slain outside Detroit and then dumped within the city.
"Detroit is a dumping ground for a lot of stuff," said Margaret Dewar, professor of urban and regional planning at the University of Michigan. "There is no one to watch. There is no capacity to enforce laws about dumping. There is a perception you can dump and no one will report it."
Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.Notice the complete ineptitude of San Bernardino City Councilwoman Wendy McCammack. She was willing to bankrupt San Bernardino by making untenable pension promises to "attract and retain" police officers. Did it work?
He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.
San Bernardino, a city of 209,000 about 60 miles (100 kilometers) east of Los Angeles, is typical of the phenomenon. Its city council voted July 18 to approve an emergency bankruptcy filing, about six years after the panel unanimously lowered the retirement age for public-safety workers to 50 from 55.
The council acted in August 2006 even though Aon Plc, the city’s risk-management consultant, had warned it that such a change would add millions of dollars to San Bernardino’s long- term pension costs. In the fiscal year that ended in June, pensions consumed 13 percent of the city’s general fund, up from 9 percent in fiscal 2007.
“I knew it was going to be costly in the long run,” San Bernardino City Councilwoman Wendy McCammack said of the lower retirement age. “However, this city is one of the toughest to police. In order to attract and retain the kind of officers that it takes to police a city like this, that was a benefit that we had to negotiate.”
It was 1976 when the city of Oakland realized it had a major problem on its hands: A pension created 25 years earlier to benefit police officers, firefighters and their widows was proving too costly to afford.Complete Idiocy by Councilwoman Pat Kernighan
So the city closed the plan to new employees and later passed a parcel tax to pay for the pension. Yet today, that pension remains the source of one of Oakland's biggest headaches.
It's a generous plan that awards its retirees and widows - who now number 1,086 - raises to match up to two-thirds of the pay of the current-day workforce. But the city's costs ballooned because it never adequately contributed to the pension fund, relied on borrowing for years to give itself holidays from pension payments and watched investments go south. The result of the borrowing is that the pension, known as the Police and Fire Retirement System, has cost Oakland taxpayers hundreds of millions of dollars more than it should have. In 2010, City Auditor Courtney Ruby found Oakland spent $250 million more on the pension than it would have if the city had simply paid into the pension - and that was just for one of its bond deals.
Last month, the majority of the Oakland City Council, at the urging of Mayor Jean Quan's administration, voted to borrow money once again to cover the pension bill - $210 million in new pension bonds that will cost another $105 million in interest over the next 14 years. But the loan will allow the city to avoid paying for the pension from its general fund for four years. If the city hadn't borrowed the money, it would have been forced to take $38.5 million from its roughly $400 million general fund to pay for the pension this year. Such a move would have required deep cuts to city services, which already have taken a hit due to the slumping economy, state budget cuts and redevelopment shutdown.
Wipe out parks, libraries
"If we had to pay this money this year and the next couple of years, the cuts would imperil our Police Department as well as completely wipe out our libraries and parks," said Councilwoman Pat Kernighan. "In a few years, we're going to be in a better position to make the payments."
New orders for factory goods unexpectedly fell in the United States in June, a fresh sign that the slowdown in the country’s manufacturing sector will probably stretch into the second half of the year.Car Sales "Somewhat Softer Than Expected"
The Commerce Department said on Thursday that new orders for manufactured goods dropped 0.5 percent during the month. Economists in a Reuters poll had forecast a rise of 0.5 percent.
American factories appear to be one of the sectors most vulnerable to Europe’s festering debt crisis. The trend in American manufacturing has appeared softer and has added to concerns the economic recovery is losing steam. The decline in new orders in June will probably mean softer output down the road, which could weigh on economic growth.
Major automakers reported U.S. auto sales for July that were somewhat softer than expected as high U.S. unemployment and weak consumer confidence kept would-be buyers on the sidelines.Expect the Unexpected
July auto sales showed the continuation of what has been a slowdown in growth since the late spring. Sales early this year shot past even the most bullish forecasts, but starting in May, the rate of improvement started to weaken.
"If we were talking in February this year and you asked me what we're going to have July, I'd say at least 14 and a half," said TrueCar.com analyst Jesse Toprak. "But we're going to barely get to 14."
GM, the largest U.S. automaker, reported on Wednesday a 6 percent drop in July U.S. sales, while Ford posted a 4 percent drop. The smallest U.S. automaker, Chrysler Group LLC, posted a 13 percent increase.
GM and Ford both pinned their declines on lower sales to fleet customers like rental car companies. GM's fleet sales fell 41 percent, in line with the company's forecast last month.
But their overall results were still lower than some estimates. Analysts had expected better financing deals, pent-up demand and increased construction spending to offset the sluggish U.S. economy.
Toyota sales were up 26 percent to 164,898 in July. A year ago, Toyota was still grappling with major vehicle shortages stemming from the March earthquake in Japan. In a release, Toyota said customers were taking advantage of long-term, low-interest financing at low lease rates.
"The PMI registered 49.8 percent, an increase of 0.1 percentage point from June's reading of 49.7 percent, indicating contraction in the manufacturing sector for the second consecutive month, following 34 consecutive months of expansion. The New Orders Index registered 48 percent, an increase of 0.2 percentage point from June and indicating contraction in new orders for the second consecutive month, but at a slightly slower rate. Both the Production Index and the Employment Index remained in growth territory, registering 51.3 percent and 52 percent, respectively. The Prices Index for raw materials registered 39.5 percent, an increase of 2.5 percentage points from the June reading of 37 percent, indicating lower prices on average for the third consecutive month.
|MANUFACTURING AT A GLANCE
|Customers' Inventories||49.5||48.5||+1.0||Too Low||Slower||8|
|Backlog of Orders||43.0||44.5||-1.5||Contracting||Faster||4|
U.S. and euro zone factory activity slumped again in July while Chinese manufacturing hit an eight-month low, surveys showed on Wednesday, as economies worldwide showed signs of slowing.Would Another Round of QE Help?
Economic malaise was worst in the 17-country euro zone, where output plummeted and the manufacturing sector contracted for an 11th straight month as a downturn that began in smaller countries continued to spread into core euro area economies.
The slump worsened in Italy, Spain and Greece as well as the region's two biggest economies -- Germany and France.
Europe's economic woes also depressed export orders in China and India, where manufacturing had appeared to be holding up despite the euro zone debt crisis and slowing U.S. growth.
U.S. manufacturing, meanwhile, contracted for a second consecutive month, according to the Institute for Supply Management's index of national factory activity.
A separate report from Markit showed activity barely expanding and at its slowest pace in almost three years, partly due to lower European demand for U.S. products.
"The manufacturing numbers are pretty dismal. There's really no good way to read them," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "I think they bolster the case for more Federal Reserve action, and globally the argument is pretty much the same."