Expecting The Impossible And Denying The Inevitable

July 1, 2011

At lunch the other day, a friend who recently returned to New York after living abroad for many years asked me what will happen if the federal debt ceiling is not raised before the official drop-dead date of Aug. 2. I said pretty much what President Obama said at Wednesday’s news conference, when he declared that the fallout from missing the deadline, and any resulting default on Treasury debt, would …

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Keeping College Debt Under Control

September 29, 2010

In good times, and especially in bad, college graduates tend to earn more money than their less-educated peers, and they have less trouble getting and keeping jobs. But does this mean that any college, at any price, is a sound financial investment? No, it does not. It disturbs me to see young people start their adult lives with debts that they will struggle, sometimes for decades, to repay. Many of …

How Everyone Came To Have A Second Mortgage

August 24, 2010

A quarter-century ago, only someone in desperate need of cash would take a second mortgage. Then Congress changed the tax rules, and today, millions of Americans have “home equity” lines. Banks are losing $30 billion a year on these products, and untold thousands of families stand to lose their homes to foreclosure. Is this another example of a law’s unexpected consequences? Nope. This outgrowth of the Tax Reform Act of …

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Creative Financing For Uncle Sam

August 23, 2010

Check the national debt clock: Our federal debt is $13.3 trillion, next year’s budget is $1 trillion in the red, and we have unfunded commitments for Social Security, health care and other programs as far as the eye can see. Is the United States already insolvent? Yes, according to a recent Bloomberg column by Boston University economics professor Laurence J. Kotlikoff. After comparing the government’s obligations with its expected future …

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Life Insurers Pump It Up

October 26, 2009

After the financial scandals of the past decade and the institutional meltdowns of the past year, you might think regulators would have gotten awfully fussy about companies that try to make themselves look stronger than they really are. Think again. In the world of life insurance, regulators across the country are allowing companies to issue debt — sometimes significant amounts of debt — without reporting this debt on their balance …

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