Housing Recovery? Economic Recovery? Forget It
by Karl Denninger
Forget it folks.
When you add all this together with the demographic problems we have, you’ve got the ingredients for a disaster — a disaster we are going to encounter sooner rather than later.
The amount Americans owe on student loans is far higher than earlier estimates and could lead some consumers to postpone buying homes, potentially slowing the housing recovery, U.S. officials said Wednesday.
Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That would be roughly 16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.
This is going to destroy retirements and those who currently own homes. You’re finished folks.
Here’s the problem — we have a demographics issue, as everyone who has paid attention knows. That is, there are fewer young people compared to old, which leads to pressures on things like Medicare and Social Security.
But the traditional path is for older people to downsize their economic lives. They sell their big house and buy a smaller one, or live in an apartment.
To sell it someone has to have money to buy it. Who is that going to be?
It’s not going to be the young adults now in college because we have screwed them by saddling them with this debt. They thus cannot qualify for a loan to buy your house!