Landmark Links February 24th – Boom


Lead Story… American households have deleveraged since the Great Recession began in 2008.  Outstanding debt for nearly all consumer and household segments is lower than it was in 2008 with few exceptions (automobile debt has increased). In fact, household debt as a whole is 1% lower across the board today that it was in 2008. There is, however, one type of household debt that has been on a straight moonshot since 2008: student debt, which is up a whopping  105%.  An the problems are actually worse than they appear once you take a look behind the raw data.  From Bloomberg’s Shahien Nasiripour (h/t Tad Springer) (emphasis mine):

Close to one-quarter of student debtors whose bills have come due are either in default or at least 90 days late on their required monthly payments, New York Fed data suggest. Delinquencies have remained stubbornly high, despite attempts by the former Obama administration to make loan payments more affordable. The federal government owns or guarantees more than 90 percent of all student debt.

The rise in student debt worries federal regulators responsible for policing financial markets. During the Obama administration, authorities cited student debt as a risk that could slow U.S. economic growth. President Donald Trump decried student indebtedness on the campaign trail, likening it to an “anchor” that prevents Americans from advancing.

The problem could be even worse than the New York Fed’s data suggest. The report is based on a sample of household credit reports, which regulators have found are often filled with errors. The Federal Reserve Board in Washington has total student debt pegged higher, at $1.41 trillion.  

There are two big problems here:

  1. Unlike other forms of household debt, student debt cannot be discharged in a bankruptcy settlement.  It also tends to carry higher balances than, say credit card debt.
  2. As bad as the student debt problem is, the alternative is still much, much worse. Not having a college degree results in substantially lower earnings and substantially higher unemployment.  I suppose that the exception to this is the incredibly rare computer genius who drops out of college and becomes a tech multi-millionaire or better.

It was once possible to live a comfortable middle class lifestyle in the US with a high school diploma.  That time has unfortunately passed with few exceptions.  The stark reality of the situation is that students today are more frequently saddled with high levels of student debt unless they get a relatively rare full scholarship or have wealthy parents who can pay in cash.  The rising cost of a college education shows no signs of abating soon and neither does the plight of workers with only a high school degree, leaving today’s young adults who don’t have wealthy parents stuck between a rock and a hard place.  As bad as the college debt situation is, it’s a necessary in today’s world so long as the alternative is still much, much worse.


On Track: The US economy looks like it is going to hit the Federal Reserve’s growth target for 2017, meaning that 3 rate hikes are likely.

The Disconnect: Workers are in high demand, so why aren’t we seeing more wage inflation? Perhaps there is more labor market slack than commonly thought.

In the Long Run: Chatter about issuing 50-100 year government bonds from new Treasury Secretary Steve Mnuchin is sending yields higher.


Sounding the Retreat: Banks are being a lot more cautious in the multi-family lending market as concern over supply mounts.

Bucking the Trend: Not all big box stores are in trouble – Walmart and Home Depot are actually thriving.  See Also: Walmart’s online sales are growing at a double digit pace.  Contra: Walmart’s big box of trouble – Warren Buffett just dumped $900MM of Walmart stock, sees rough times ahead.


Killing Two Birds with One Stone: Combining student and senior housing can help alleviate two large housing needs at once.

Flexing: January’s existing home sales were at their fastest pace in over a decade, outperforming forecasts as supply continues to dwindle.

Foodie Heaven: As grocery stores struggle to fend off Amazon, some upscale ones are finding a second life as the anchor tenants in residential developments.


SMH: This New York Times article about California secession is just chock full of bizarre Golden State stereotypes:

“I wanted to be here [at the meeting] to be no longer American, but Californian,” said Hirsch, who voted for Hillary Clinton and said she has at least seven professions, including psychic, Uber driver and hypno-transformative masseuse. “I hate what the rest of America has become.”

Profiles in Courage: The president of Iceland said that he would ban pineapple as a pizza topping if he could, becoming one of my hero’s in the process.  American politicians should take note.  The man has a 97% approval rating for a reason.

Tastes Like Chicken: Hungry Venezuelans are killing protected flamingos and anteaters for food as 700% inflation continues to take it’s toll.  Viva Socialism!

Chart of the Day

Student Debt in America Has Hit a New Record


So It Begins: A rogue pack of Chihuahuas is terrorizing an Arizona town.  Repent, the end is near.

Cooked: A teacher in Canada was suspended after giving her 8th grade class a homework assignment on how to make and inject crystal meth.  I don’t see what the big deal was as this is still a more useful real-word skill than geometry.

No Happy Ending: A planned threesome at an upstate NY casino ended with assault charges and handcuffs when a fight broke out after one participant suggested adding a 4th person.  You know what they say: Three’s company.  Four’s a crowd.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at