New American Socialism, One of the Most Obvious Frauds Ever Foisted on the American People
Jul 05, 2011
Yesterday, I left you with a question…
Over the past few days, I’ve described what I call New American Socialism. As I’ve shown you, it’s a kind of legal corruption whereby the risks of doing business are assumed by the taxpayers… but the profits still accrue to private enterprise.
The corruption has infected one industry after another. And it’s weighing down our economy… But I’ve actually preferred having it in many of the stocks I’ve recommended over the years. It tends to be good for investors.
So the question now is, am I still interested in buying into New American Socialism? It’s a difficult question… and the answer is complicated. So bear with me…
In yesterday’s essay, I described a tragedy unfolding in the education sector. If you missed the essay, I suggest you go back and give it a read. You’ll find the numbers disturbing.
Essentially, the for-profit education industry is selling a product its customers cannot afford.
This industry games the rules of the government and spends a fortune on lobbying – more than $12 million in the last year. This industry would literally not exist without government-guarantees standing behind 90% of its revenues.
And Wall Street experts estimate this industry will rack up around $250 billion in credit losses over the next decade – an amount of money that exceeds the losses from Fannie Mae and Freddie Mac so far.
All these risks will eventually cost the U.S. Treasury billions of dollars. You see, this industry overwhelmingly targets women and minorities – people who are often up against a wall financially. These students will never be able to repay these debts.
While these students have no financial skin in the game (many borrow 100% of their tuition), they face enormous consequences down the road from this scheme… Student loans are notoriously difficult to discharge, and many borrowers will be crippled financially by the obligations they cannot afford.
The facts of this situation are incontrovertible and well known – even inside the current president’s administration. And yet… even when all of these facts were studied and reviewed… what did the president do?