Bernanke Says Student Loans Won’t Cause Crisis
OUCH, the last time Bernanke was this confident was when he stated that Sub-prime mortgages would not threaten the broader economy.
$1 Trillion in student loans, all held by people who were able to avoid the cost of their behavior, and all backed by the government. From Bernanke “I don’t think it’s a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government.” You really can’t make this stuff up, so there you have it folks, nothing to see here, please-please go about your business and enjoy your next shopping experience in the USA.
Two MAJOR problems, #1 the debt is backed by the Federal Government (taxpayers). #2 The debt is held by a generation that is struggling to find work, in fact even those grads that do find work, 44% of them aren’t finding work in jobs that they went to school for. Instead their Environmental Science Degree is helping them serve tables at the local North Woods Inn Steak House.
The student loan bubble will absolutely burst and of course it will spread into the broader economy, what do you think is going to happen when young people struggle to pay these loans off? This is money that will be subtracted from their expected American consumerism.

Here is a great video about Bernanke’s predictions since 2005.