DO COLLEGE STUDENTS NEED JOBS OR LOWER RATES ON STUDENT LOANS?
RICH KARLGAARD: They need jobs. You can’t pay back a loan if you don’t have a lousy job. To get more jobs in this economy, we need a functioning economy. On Friday, we got the terrible news that the first quarter grew at 2.2 percent. That’s exactly half of where the American economy should be during an economic recovery. We have an administration that never talks about economic growth. They talk about endlessly about fairness, never about economic growth; consequentially a poor job environment and consequentially we have this crisis growing in student loans.
RICK UNGAR: The truth is you need both. Kids have to be able to get prepared for the workforce that is the future. One of the things we do a little too much too often is judge everything right now. Look the state of Ohio this week announced there will not be enough graduates to fill the jobs that they expect to have coming over the next 6 years. Let’s give these kids a chance to get an education when we still know that you earn twice as much money coming out of college with a degree then you earn when you only have a high school degree. Let’s look towards the future a bit.
STEVE FORBES: The college student should be booing the president, they won’t because they have good manners instead of cheering him, because tuition is rising rapidly, economy stinks and they aren’t going to get those lower interest rates. The journal had a piece yesterday that only applies to new loans made after July 1st. This is real bad magician stuff; you aren’t even going to get the cut rate on interest rates. If the president was serious about jobs, he wouldn’t be undoing binge spending, reforming the tax code, getting rid of Obamacare, and the other things holding the economy back. Instead, it hurts them and expects them to vote for them.
MORGAN BRENNAN: This interest rate debate makes me crazy. I do think we need both. I think we need jobs and lower interest rates. The point is that with all this interest rate situation, it only kicks in on new loans it only kicks on subsidized Stafford loans, it doesn’t tackle the larger problem. I would say, yes we need jobs, but also need a complete overhaul of the student lending financial model in general. The truth of the matter is subsidized loans are one tiny piece. What most students are sitting under the hardship of is private loans which have higher rates and aren’t as regulated and that needs to be looked out. Tuition prices need to be looked at.
MIKE OZANIAN: The president said the reason why he needed to go on this borrowing binge is to keep the unemployment rate under 8 percent. Oops, it’s always been above that. President never talks about growth; what he is focused on is the redistribution of income. What this legislation focuses on is taking money from families who have earned and saved to send their kids to college and have them subsidize those families who don’t have the money to go to college. Yes, it is absolutely true Rich. Who is going to pay the 5.9 billion dollar cost, the bulk of that cost? Foreclosures have been increasing since the sister program to this which initially set rates at 3.4 percent went into effect.
VICTORIA BARRET: To look into Rick’s point that we need to look up into the future a bit, I agree but we also need to look into our recent past. When you flood a market with subsidized loans, prices go up artificially. We saw that in the housing bubble, and now we are seeing it in college tuition. It’s a shame, it’s a shame for taxpayers, and it’s a shame for those students who walk out of school with egregious amounts in terms of loans. We have got to completely overhaul this, and take out that government subsidy and tell schools, we are going to pay less, this is absurd.
IN FOCUS: IS INFLATION ALREADY A PROBLEM IN U.S.?
ELIZABETH MACDONALD: Yea it is real and you know the markets have been sending up the smoke signal for some time that inflation is a problem. You see that Kimberly Clark, GM, Nike, and Clorox we’ve been seeing inflation in the grocery store for sometime whether its energy prices whether it’s a weak dollar, it’s here.
MORGAN BRENNAN: I would agree that inflation is here but not say we are in problem territory just yet. I’ll take the fed line for a second. Prices have risen about 2.3 percent in the past year but the Fed did say just this week that it will flatten out around 2 percent which potentially is a healthy rate for the year. That being said it has not stopped consumers from spending we saw retail sales up a bit a little over 6 percent this first quarter and auto and home sales are up. It’s not affecting people’s purses yet, it’s not a worry for me yet.
STEVE FORBES: This whole corn flation thing is bogus we’ve had an inflation problem for 8 years that’s why we have the housing bubble. If that hadn’t printed so much money we wouldn’t have had the juice for that housing bubble so it’s hitting the whole economy. You go to a grocery store what do you find? You find that the prices don’t go up the packages get smaller. So the inflation is here it’s not just affecting the consumer it’s just affecting all the people around the world. Cheap dollar means weak recovery. Get a hold of it Ben.
RICK UNGAR: I think Morgan had it exactly right. You have to be a little careful on how you look at these numbers. We know this week Proctor and Gamble announced that they will be rolling back on some of their prices. When you look at Hershey which was the example you’ve chosen … what does Hershey make? They make chocolate and we know the price of the cocoa beans are a 30 year high, why? Supply. So you know, yes we have to be very vigilant about inflation I don’t disagree with that at all we are coming out of a very difficult period, where stimulus was required. There has been a lot of printing of money absolutely keep your eye out for it … are we there yet? Just remember it was only a year ago that we were worrying about deflation.
BILL BALDWIN: Listen, Uncle Ben Bernanke has been throwing $20 bills out of his helicopter for 3 years now. The intended effect was corporations to expand their employment that hasn’t happened we had instead an unattended affect and this could cost Obama the election. It’s 4 dollar gasoline.
RICH KARLGAARD: Well the world of raw materials has gone up over the past and it’s not just the Obama administration during the Bush administration too. The reason that inflation isn’t worse statistically is because the world of technology is dragging down costs-can make free long distance calls over Skype and many of other things. Poor people have been really hurt because they live in a world where disproportion amount of their income goes towards fuel and food and they’ve been killed.
TIME TO PRIVATIZE TSA?
VICTORIA BARRET: Well I think it would help and here’s why. I think it’s a very hard job to do, day to day, looking at thousands of people. I think if you privatized it, you would have some creative management looking at it and potentially making those jobs better and more productive, so you wouldn’t have issues like this on both ends.
RICK UNGAR: I wish it would, I’m not crazy about it either. But the reality is, if we are going to switch the TSA into a private entity to solve the problem does that mean we have to put Wal-Mart into the government because of their bribery and corruption problems. It’s not going to change anything you’re just adding a level of profits and middle management.
ELIZABETH MACDONALD: You treat the people as customers who get to complain to somebody, it’s not like your shouting into a field of cotton with nobody listening. When did we outlaw common sense with TSA people? And when did they start behaving like bouncers at a college bar assaulting that poor little girl and a 95 year old woman? Listen pre 9/11 airport security was privatized and answered to federal screeners. Even before and after 9/11 weapons are still getting through. What’s happening now, individuals are literally getting accosted and they can’t complain because the government doesn’t listen.
BILL BALDWIN: I have a word for Victoria; you privatizers should pick your targets more carefully. Don’t privatize police forces such as the TSA. Do privatize industries where competitions would really help people. Privatize education, every poor family in the city should have 3 elementary schools competing for their voucher dollars. Work ont hat Victoria, let the TSA be.
MIKE OZANIAN: I want to go back to what Emac said. There is no civility here. Bill, I say to you, why do we need a police action for the TSA? These guys are checking bags, there aren’t hunting down criminals with firearms here.
STEVE FORBES: The answer is that we are the land of innovation, allow private competition and you will see better security and faster lines.
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