You Should be Able to Refinance Your Student Loan Debt




It took me a while to figure this out, so bear with me. Megan McArdle tries to pooh-pooh a very good question asked by Bernie Sanders:

The day after Christmas, Bernie Sanders asked a question on Twitter: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”


Finance types may snicker. But I’ve seen this question asked fairly often, and it seems worth answering, respectfully, for people whose expertise and interest lie outside the realm of economics.


The short answer is: “Loans are not priced in real life the way they are in Sunday School stories.” In a Sunday School story, the cheapest loans would go to the nicest people with the noblest use for the money: single mothers who need money to buy their kids a Christmas present, say.

That’s splendid for the recipient. But what about the lender? Let’s say you had $150 that you really needed to have at the end of the month, say to pay your rent. Would you want to lend it to the single mother whose income is stretched so tight that she needs to borrow money for Christmas presents, or would you want to lend it to some heartless leech of a securities litigator with an 800 credit rating who happens to have left his wallet at home? C’mon. You know the answer; you just don’t want to say it. If you really need the money -- if you cannot afford to turn your loan into a gift -- then you lend it to the better credit risk with the higher income, not the person who may find themselves too short to pay you when the loan comes due.


In aggregate, most of the money in your savings account is loaned out using this cold calculus, and unless you could afford to have that contents of that account suddenly vanish, you want it to be. That’s why poor people, on top of all the other unfairness heaped upon them, pay higher interest rates. And that is why secured loans, like mortgages, get lower interest rates than unsecured loans, like credit card balances and student loans.


Student loans are two-for-one in terms of risk: They are frequently made to people with no income, no credit history, and somewhat imperfect prospects; and they carry no guarantee of payment other than the borrower’s signature. If someone fails to pay their auto loan, you can take their car away. This ensures repayment in two ways: first, you can auction the car and recover some of the money that you lent out; and second, people need their car, and will scrimp on other things in order to keep it from losing it. The immediate personal costs of failing to pay your student loans, on the other hand, are pretty minimal, and people are going to take that into account when they decide whether to pay you or the auto finance company. That’s why the government has to guarantee these loans; the low-fixed-rate, take-any-course-of-study-you-want-at-any-accredited-institution, interest-deferred-in-school is probably not a financial product that would exist in the wild.


Secured loans have thus always carried lower interest rates than unsecured loans, and will do so until the heat death of the universe renders moot such questions.

And so on, and so forth. McArdle tries to demonstrate competence and knowledge here, but let's go back to the question that kicked off this discussion:

Bernie Sanders asked a question on Twitter: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”


Let's ignore McArdle and really answer the question. Let's say a family, who refinances their home, takes a look at their student debt and makes an honest effort to refinance that debt. They can't! And that's why the question needs to be answered from the viewpoint of a family with student loan debt as opposed to a recently graduated student with student loan debt.





McArdle is basically right about why a student who just gets out of college is charged a higher interest rate--they're a riskier proposition. But the family, with their home as an asset, is a much lower risk. Why wouldn't you allow them to use their home as collateral so that they could refinance their existing student loan debt?





That's the part that makes no sense. You have two people who are married and, if they're at a point where they own a home and refinance it, let's say they're also ten years into the thirty year process of paying back their student loans. They've been making ten years of payments on that debt at 7 or 8 percent while their home is financed at 3 percent. You could say that the only reason why they own their own home is because of the degrees they earned. 





As a condition of refinancing their student loan debt, you could minimize the risk and reduce the interest rate on their student loan debt by using the equity in their home as collateral. You're telling me that someone who has paid off a third of their mortgage is the same risk as a kid just out of college? Hell, no. They're a damned good risk and they deserve an interest rate cut. That would mean huge savings for the family and bring them greater financial stability in the long run, making it more likely that not only would they pay back their mortgage but that they would pay back their student loan debt.





And wouldn't that help bring down interest rates? Or am I being an idiot on purpose?





These are the kinds of scenarios that Sanders is really pushing--common sense changes to how we do things so that Americans can get out from under crushing levels of debt. And no one currently self-identifying as a Republican would even dream of such a thing--it runs against the economic self-interest of their primary voters as well as their donors.

The Lost Art of Competent Film Projection




Honestly, who knew we had lost the ability to show films in public?

Screening problems are reportedly plaguing Quentin Tarantino's latest film, The Hateful Eight, since its release on Christmas Day in the USA – allegedly due to its unusual 70mm film format.

Set in Wyoming shortly after the Civil War, the film revolves around eight strangers seeking shelter at a stagecoach passover called Minnie's Haberdashery during a blizzard, and stars Samuel L Jackson, Kurt Russell, and Jennifer Jason Leigh.


The unusual screening style has forced some cinemas to retrofit hired equipment and bring on experienced projectionists to manage the reels of film, which reportedly weigh over 90kg in total. The Hateful Eight's 70mm screenings include a 12-minute intermission.

Technology has run wild over the last thirty years or so. There used to be an entire radio broadcasting industry! There used to be a thing called a travel agency! Where did Blockbuster go and why am I not sorry those assholes has to go find other jobs? We used to brag about not being forced to take a phone call. Good times.

Quentin Tarantino does something nice for people (remember when this film wasn't even going to be made at all?) and all they can do is crap all over it because someone forgot how to handle a 70mm film projector. First world problems being what they are, how can anyone get so worked up about this?

Tell the Libtards that Obama Still Sucks




Jobs? What jobs?

Look, here's how the modern American economy works. If a Republican is in office, the deficit doesn't matter.

If a Democrat is in office, the deficit is the ONLY thing that matters.

Here's proof, via Paul Krugman, that Obama has been a far better president than we're being told.





It's hard to argue with the proof at hand, but that's all they have--an argument. The fact that it doesn't hold water is a feature, not a bug.

Food Snobbery




I was flipping through posts, and this caught my eye:

I must be the only media person to say something nice about Guy Fieri in years, because one of his representatives contacted me wondering whether I'd like to talk to him about all the restaurants he thinks he's helped saved. (I mentioned that he's done more for small businesses than any small-business-friendly-GOP-enthusiast in my lede.) So, um, there's that!


FTR: This is now officially on.

The outrage against Fieri is driven by the Gawker community, and by food snobs. His most vocal critic is Anthony Bourdain, who uses Fieri the same way music snobs used to use John Denver in the 1970s. After a while, you come to realize that food snobbery is a real thing that is too ridiculous to care about. I don't care what you like to eat, and you shouldn't care about what other people like to eat. Guy Fieri isn't just a guy on television who's trying to get you to eat something. He goes out and tries to help restaurants stay afloat.




I believe that Fieri and a very similar type of television host named Jon Taffer (Bar Rescue) have done more to save small businesses than anyone on television. 





If you think about all of the wage earners that they have kept employed, and all of the small businesses that they have helped, you can't help but wonder why people hate the guy. If they both keep twenty or so businesses afloat each year, that's a lot of wage earners that are keeping their jobs. This is an underserved market because there are restaurants, bars, and retail businesses out there that need a lot of help. Their success has a huge impact on lives and communities. And they're small businesses--who wouldn't want to help a small business? It's a no-brainer.





I love Taffer--clean this place up! is the best advice anyone running a dive bar ever got. Taffer is no-nonsense and he uses business analytics. Fieri is cut from the same cloth. 





He's got a California car culture look and working class culinary skills-so what?





And Rachael Ray will always be one of my favorites.

Microagressions Suck





Just by writing this, Emily Shire committed a microagression!

Before 2015, playing beer pong and pulling all-nighters were the activities most associated with the college experience. That all changed this year.


From large public universities in America’s heartland, like the University of Missouri, to small private colleges along the coasts, like Claremont McKenna College in California, student outrage spread like mono at a frat party.


A new lexicon to cover hot-button campus issues—“microaggressions,” “safe spaces,” “yes means yes”—entered the mainstream as college protests earned increasing national interest, far beyond the academic bubble.


Student outrage doesn't bother me and it shouldn't bother you, either. Let them get spun up about these things--it's not like there aren't people being shot and it's not like women just stopped being raped. Let them have their moment within the safe environment of college to learn how the world really works, and, oh by the way, let them change society for the better by redefining what we can and cannot talk about. Deriding someone's opposition to racism or gender inequality means you're getting a taste of what's around the corner. Eventually, we'll all stop offending one another, even if it means giving up a banh mi sandwich, whatever the hell that is.

Pardon Me?




Lovable scamp Robert Downey Jr. received a full pardon today:

California's governor has pardoned Robert Downey Jr. for a 1996 drug conviction that sent the actor to prison.

Gov. Jerry Brown's office announced Thursday that Downey was among 91 people receiving pardons.


Downey was convicted of felony drug possession after he was arrested on a Los Angeles County highway and authorities found heroin, cocaine and a pistol in his vehicle.

In 1999, he was sent to prison for nearly a year after he acknowledged violating his probation.





Does Downey Jr. deserve a pardon? Not in my opinion, but he's always been given a pass for crimes that would have sent a poor person of color to jail for a decade or more. He basically spent about four years completely out of control and was given numerous "second chances" that, again, would never have gone to someone else.





And that's the real problem here because you want to give people a break. You want to take a non-violent offender and give them an opportunity to turn their life around and get help. The problem is, our system takes people of color and throws them in prison. Downey Jr. was supposed to serve three years in prison for what he did, but he only served a year, got out, got a job, got high numerous times, and didn't have to go back to prison and serve those extra two years. How many people of color have even had a remotely similar experience with the California penal system? This same system gives Robert Downey Jr. seventeen or eighteen chances, turns a blind eye to felony possession of narcotics and gives him a pardon. When you go back through his records, you come away with the sense that, as soon as someone recognized him, they tried to give him a pass. That's shameful.





If he didn't have the money, he'd have never gotten a pardon today. That's what's broken with our system.






So Much For That Scandal




How much do you want to bet that there will be a "scandalous" revelation about the Clinton Foundation in the weeks ahead?

One of the nation's largest charity watchdog groups has removed the Bill, Hillary & Chelsea Clinton Foundation from its watch list that is supposed to alert donors to potential issues of interest when they are making philanthropic decisions.


The foundation was placed on the watch list in April after a slew of news stories about foreign governments and donors giving to the foundation who were also lobbying the Obama administration while Hillary Clinton was secretary of state.


The Clinton Foundation responded to the label with a lengthy memo in May.
"There has been no indication, accusation or evidence in any of these stories of any wrongdoing," the memo read. "Our supporters donate to the Clinton Foundation because they want to see lives improved; they want better opportunity across the globe; and they want to see communities, businesses and governments working together to address problems that, when working together, we have the solutions and resources to fix."


The way it works is, someone makes a barely-sourced accusation against the Clintons, and, under the Clinton Rules, every minor malfeasance that emerges in the fevered imagination of someone who won't put their name on anything becomes a huge scandal that normally wouldn't affect a Republican with similar issues. Everything is blown sky-high and out of proportion so that, eventually, we get to read about the vindication the Clintons when the information is dumped on a major holiday or on a late Friday afternoon.

Failure




I'm not sure why they went with the whole failure angle here. If this young man had been a moderately successful writer, it would still be irrelevant. He's a dangerous psychopath and his skills in the arts don't change that fact:

An aspiring author who brutally attacked a teenager after she left a bad review of his book online has been jailed.


Richard Brittain smashed Paige Rolland, 18, over the head with a wine bottle in an assault which could have killed her.


The failed writer, 28, has now been sentenced to 30 months in prison and banned from contacting his victim, reported Mirror Online.


Brittain’s defence counsel Michael Meehan pleaded for his client to avoid jail, saying he was either suffering from paranoid schizophrenia or a personality disorder.


But Sheriff Martin Jones QC insisted “the only disposal in this case is a custodial one” and ordered Brittain to be monitored for one year after his release.


In October 2014, Brittain traveled 500 miles from his home in England to the supermarket where Rolland worked in Scotland to confront her after she criticized his book "The World Rose" online.

Now, the bad review that triggered the incident should be considered separately. Everyone gets them. You have to deal with them. But, for a bad review to trigger a 500 mile trip so that the man could stalk and attack his victim suggests that he shouldn't be allowed in polite society. Jail is one thing. Where's the treatment for mental illness? If someone is writing on their personal blog that they are schizophrenic, I think you should take them at their word.

In case you're wondering, yeah, he gets some really bad reviews:




People have savaged Brittain on his Amazon account for a long time. They hate his writing! It must be all of those adverbs and the passive aggressive tone. And every review I saw cleverly adds details about his wine bottle attack--a sure sign that the review is designed to destroy the commercial appeal of his work.

I don't know whether that's brave or piling on, but someone should get this man the help he needs.

Your Kids Belong in the Car, Not on the Roof




This is a story about parents who have lost control of their common sense:

LEAGUE CITY, TX (KTRK) -- One League City neighborhood attracts people from all over with its homes decorated for the holidays.


But Tuesday night, as Jeremy Barron was headed home, he saw something he had never seen before.


"As I passed by them I saw the kids sitting on the roof and it just blew my mind,"said Barron.


Barron says he saw as many as three children riding on top of a minivan as it cruised through the neighborhood. He couldn't tell if they were restrained in any way. There were two adults inside. Barron has no idea who they are.

Now, this was Texas, not Florida. Based on my super scientific application of incompetent Photoshop, there was an older kid holding on to a smaller kid. They may have been tied to the luggage rack.





Bad parenting. Bad, bad, bad. And worse Photoshopping, too. Well, at least I don't use Photoshop on the kids.

Whoring at the Smithsonian




Yeah, I hate this kind of thing:

I don't have a problem with catering to kids. I don't have a problem exposing kids to food-based exhibits and things that are purely for fun or entertainment. You don't have to learn all the time. But I am rather surprised that the Smithsonian is the go-to place for corporate whores and overpriced supermarket chains that cater to the wealthy. If you want to do a mutually beneficial exhibit, why target kids? Sounds vaguely evil to me.

Does Wegman's do good in your community? I hope so. And I'm probably just cranky today. But who the hell thought sticking an advertisement for Wegman's in the middle of the Smithsonian was a good idea?

Cheap Oil




A barrel of oil goes for about $39 right now:

Oil fell below $37 a barrel on Thursday, after new data showed OPEC is still pumping like there is no tomorrow.


The mighty oil cartel produced 31.7 million barrels a day in November, its latest monthly report shows. That is the highest output in over three years and 1.7 million barrels a day over its former production ceiling.

Oil hasn't been this cheap in a long time. About a year and a half ago, it was $108 a barrel.

The implications of this probably aren't well understood. There are a number of countries--Iran, Venezuela, Mexico, Nigeria, and Saudi Arabia that face unique circumstances at home. They have restive, unhappy populations that are trying to live in struggling economies. The governments of those nations (only Mexico is a non-OPEC state) are forced to chase revenue and produce oil in abundance, working against their common interests in the name of maintaining a revenue stream that is drying up.

If those countries come apart at the seams because of cheap oil, we'll have interruptions in supply and the possible intervention on the US military as a result. Sure, I like paying less than $2 for a gallon of gas, and I laugh about it all the time because what else could be more hilarious, but there are some really difficult choices here. Do we continue to live like this and hope the oil producing states can remain stable or do we welcome a modest price hike? It would seem to me that someone has to figure out how to cut production, bring the price up, and do this quietly.

Sometimes the Bear Eats You






How awful.

Setting aside the tastelessness of using any form of rape as a joke, someone must really want The Revenant to fail:

20th Century Fox has dismissed reports that Leonardo DiCaprio's character is "raped by a bear" in his latest film The Revenant.

There's the whole thing about the politician (Lyndon Baines Johnson?) who told his staff to put out a rumor that his opponent was a pig fucker. The idea was, just getting him to deny that he was a pigfucker was good enough. But to extend this kind of cruelty to the release of a feature film is beyond the pale. Serious economic damage could be done here, and for what? To embarrass Leonardo DiCaprio?

You've really got to be disturbed to use a tactic like this.