Student Loans: The Continuing Crisis, Part XVIII

Another dispatch from the United States, whose bizarre system of financing higher education forces university students to take out huge amounts of debt before they have jobs. In the face of a weak job market for new graduates, the system is steadily collapsing:

Student loan debt has been
growing every quarter since at least 2003, the earliest data included in
the report. And delinquency rates look worse than previously believed.

student loan balances totaled $956 billion as of the end of September,
rising $42 billion from the previous quarter….

The New York Fed calculates that 11 percent of
student loans are now at least 90 days delinquent, with this rate now
officially passing the “serious delinquency” rate for credit card debt
for the first time.

That milestone may be misleading, though. The
report says in a footnote that “these delinquency rates for student
loans are likely to understate actual delinquency rates because almost
half of these loans are currently in deferment or in grace periods and
therefore temporarily not in the repayment cycle,” adding, “This implies
that among loans in the repayment cycle delinquency rates are roughly
twice as high.”

It’s worth mentioning, by the way, that student
loan debt cannot be discharged in bankruptcy, while most other forms of
debt can. One reason consumers have managed to shed so much debt is that
lenders ended up writing off quite a bit after the financial crisis.

Yves Smith piles on:

Student loan delinquencies are getting into nosebleed territory. The
Wall Street Journal, citing New York Fed data, tells us that student debt outstanding increased 4.6% in the last quarter.
Repeat: in the last quarter. Annualized, that’s a 19.7% rate of
increase* during a period when other consumer borrowings were on the
decline. And this growth is taking place while borrower distress is
becoming acute. 11% of the loans were 90+ days delinquent, up from 8.9%
at the close of last quarter. The underlying credit picture is certain
to be worse, since many borrowers aren’t even required to service loans
(as in they are still in school or have gotten a postponement, which is
available to the unemployed for a short period). And it was the only
type of consumer debt to show rising delinquency rates.

This is the new subprime: escalating borrowing taking place as loan
quality is lousy and getting worse. And in keeping with parallel to
subprime, one of the big reasons is, to use a cliche from that product,
anyone who can fog a mirror can get a loan.

The most popular type of loan, Stafford loans, allow undergraduates
to borrow up to $57,500, no questions asked. Perversely, this practice,
in isolation, looks rational. Look, if you could put borrowers in
virtual debt slavery, would you care much about lending standards? All
you need to worry about is death and those few cases where borrowers are
so clearly unable to ever work for a decent amount of money that they
can get their student debt that they can get their loans reduced or

Things are so bad that each media report seems able to present
anecdotes more extreme than previous accounts. The WSJ found a recent
graduate of Embry-Riddle Aeronautical University in Daytona Beach whose
education loans total nearly $230,000 for a college education that has
enabled him to get a job that pays $60,000. And $184,500 of that total
was borrowed by his unemployed, disabled mother through a program called
Parent Plus.

Marriage is Dead. What Will Replace It?

Recently, yet another marriage in my circle of friends blew up, making the unofficial tally something like 50% of marriages which I've witnessed ending within 15 years or so. And some of the surviving ones are on shaky ground.

All of these people, of course, swore they'd stay together until the end. Presumably, they were sincere. Yet it's become clear that only a minority of people can realistically live up to that promise. Vowing to remain exclusively with one person in a faithful monogamous relationship until death do us part makes about as much sense as vowing to work for the same firm until the end of one's career. How could you seriously promise to be working at the same firm 30 years into the future when the firm, or even the industry, might no longer exist? 15 years after your vow of permanent fealty to the firm, you get an offer at 3 times your present salary, and you're expected to turn it down? And before you reply that marriage as a 'sacred commitment' can hardly be compared to a job, ignore what people say about their preferences and look at how they actually behave. How many people are actually treating their marital vows differently from a job or consumer product? The divorce and infidelity statistics suggest very few indeed.

Marriage as an institution was created when mankind lived in primitive tribal settlements, and the average human went through life encountering the exact same 2-300 people until their death. It was also a way of ensuring financial support for women at a time when they weren't expected to support themselves. And, of course, to stabilize potentially violent unattached young males.

All these circumstances have now changed: people now encounter hundreds, if not thousands of opportunities to cheat, and the social stigma against divorce and single motherhood has never been lighter and is not coming back. Already, 40% of Americans view marriage as obsolete. In the US, only the richest Americans (especially whites and Asians) have any realistic chance of a life-long marriage; the institution has essentially died out among the middle-class and below. Marriage as a universal institution which everyone is expected to enter is like Wile E. Coyote: it ran off the cliff into thin air long ago, and is just waiting to fall.

So what will take its place? Unmarried cohabitation, for one thing (see the last link). But marriage as an institution is so deeply anchored in Western society that people will go on pretending to take it seriously for a few decades more. And there will still be the odd successful life-long marriage — among a small sub-set of risk-averse, traditionally-minded, highly religious people (all these traits are linked). Already, we see trends in most Western societies in which organized religion is shrinking to a core of about 20-25% of the population who are part-genetically, part-environmentally predisposed to experience strong, sincere, abiding religious faith within an organized hierarchical religion. Since no social pressure is forcing the rest of the population to pretend to take organized religion seriously, they are no longer doing so. Marriage as a genuine life-long proposal will survive only in highly religious communities.

What about the rest of us, though? I still think Gabriele Pauli had a brilliant idea. She's a twice-divorced, rather eccentric female politician for the Christian Social Union (CSU) party in Germany, a Bavaria-centered Catholic traditionalist party. Five years ago, she proposed that marriages should automatically dissolve after seven years unless the couple decides to renew it. Naturally, the other members of her party went berserk and quickly vowed their fealty to the noble institution of traditional marriage — presumably with the exception of CSU bigwig Horst Seehofer, who was busy having a love child with his much-younger mistress (to be fair, he ended the affair and is back with his wife. For now.)

But the idea is a sound one. First, from an aesthetic point of view, it would reduce the amount of rank hypocrisy and insincerity in society. There's just something unseemly about millions of people making promises in front of their friends and family they have no ability to keep  — merely because the dead hand of tradition demands it. A seven-year option would allow married couples to simply let their marriage automatically dissolve, instead of having to initiate a complex, potentially bitter divorce proceeding. You would have a series of default legal rules for splitting property and child custody. Of course, those who are happy after seven years could renew their vows, presumably by sending in a simple postcard with both their signatures. Or even online!

The typical objection would be: what about the children? Well, first of all, look at the chart above. Family stability is a thing of the past. In Germany, 1/3 of all children are born out of wedlock (g), and the tendency is only increasing. Soon, in all Western countries, at least half of children will be born out of wedlock anyway. Some of those will be born into stable cohabiting relationships, but most will be born to single mothers. It's hard to see a difference between those contexts and a seven-year marriage. Who knows — the existence of an easy way out of marriage might even encourage more commitment-shy men and cohabiting couples to get married, thus increasing the overall level of family stability. And let's not forget that some of the damage done to children by divorce springs from the fact that their parents once promised they would stay together forever, then break that vow when they divorce.

I think the seven-year marriage is an idea that deserves to be taken seriously, at least. But I'm not holding my breath…

Neve Campbell May Wish to Avoid Denmark

This unsettlingly thorough 'Danish Neve Campbell Webpage' is a pretty good candidate for inclusion in the list of 23 ancient websites that are still alive. It raises more questions than it answers: Why Denmark? Why Neve Campbell? Is there a dank basement waiting in Copenhagen for Neve if she ever meets the website's founder? And most pressing of all, hvorfor er stedet ikke på dansk? 

Danish Neve Campbell Webpage
At any rate, you can follow Neve's latest news by installing AvantGo on your Hewlett-Packard PDA (note: you may have to return to 2002).

American Criminal Punishment: Self-Defeating, Discriminatory, Inhumane

countries with most prisoners

Incarceration-rates-in-selected-countries-2001-v-1983A reader emailed me (thanks!) a link to this excellent piece by Liliana Segura for the Nation on US-European criminal-justice contrasts:

The United States is uniquely punitive when it comes to sentencing
compared to much of the rest of the world, whether the crime is murder
or drug possession. Putting aside the death penalty, which lands us in dubious international company, in countries with life sentences on the books, prisoners are often eligible for release after a few decades. “Mexico will not extradite defendants who face sentences of life without parole,” the New York Times’s Adam Liptak noted in 2005
(Most of Latin America has no such sentence). “And when Mehmet Ali
Agca, the Turkish gunman who tried to kill Pope John Paul II in 1981,
was pardoned in 2000, an Italian judge remarked, ‘No one stays 20 years
in prison.’ ”

The same article quoted Yale law professor James Q. Whitman, author
of a book comparing US sentencing with Europe. “Western Europeans regard
10 or 12 years as an extremely long term, even for offenders sentenced
in theory to life,” he said. Today, there are more than 41,000 people
serving life without parole in the United States compared to fifty-nine in Australia, forty-one in England and thirty-seven in the Netherlands. That’s according to a study released this spring,
which found that we are “in the minority of countries using several
sentencing practices, such as life without parole, consecutive
sentences, juvenile life without parole, juvenile transfer to adult
courts, and successive prosecution of the same defendant by the state
and federal government.” In the United States, prison sentences have
gotten longer and longer—a sea change that Americans have come to accept relatively quickly (largely because the targets have been people of color).
Just a few decades ago in high-incarceration states like Louisiana,
lifers were eligible for release in ten and a half years. Today in
Louisiana, there is no longer parole for lifers, and thus virtually no
hope of release, ever. And when it comes to crimes prosecuted under the
War on Drugs, three-strikes sentencing and mandatory minimums have not
only sent people away for life for minor drug offenses—an anomaly
compared to the rest of the world—they have led to a current reality in
which the vast majority of people arrested on nonviolent drug charges plead guilty—whether they are or not—in order to avoid such draconian prison sentences, a decision that can have lifelong implications.

…[T]he notion that a retribution-based system hands out sentences that “fit
the crime” is wildly and tragically false if the United States is your
guide. In the United States, grandmothers are sentenced to life for first-time drug offenses. Mothers who fire a “warning shot” in self-defense at an abusive husband get twenty years in prison. Teenagers who kill their abusive pimp get sentenced to life without parole. Kids who commit crimes at 14 have been condemned to die in prison—getting raped along the way—with no consideration for their age, mental health or abusive upbringing. People land on death row for failing to anticipate that an accomplice in a crime might kill someone—and people are executed for killings committed by others who then go free. The American model—which Supreme Court Justice Antonin Scalia recently summed up by musing, “I thought that modern penology has abandoned that rehabilitation thing”—is a system rife with injustice.

Germany’s Overdue for Another Hysterical Fear Attack

Seems like it's been a long time since Germans have become paralyzed with fear over something. Life here's so comfortable that the media have to invent crises and disasters, and often the only thing that presents itself is tainted raspberries or genetically-modified food or bird flu. Headlines suddenly sprout: "Tainted-raspberry Crisis Spreads Terror in Brandenburg!" "Avian Flu Set to Destroy Civilization!" "H1N1 Virus Carves Path of Death and Misery Through Unsuspecting Middle Class!"

But it's been disappointingly quiet around here lately. So let's take a trip down memory lane! In 2006, morgues overflowed and canned-food riots erupted because of nature's latest remorseless kill-bot, the Dornfinger or yellow-sac spider. Here's the fleshy beast:


You can tell that this spider became an obsession in German-speaking Europe because the German Wikipedia article on it (g) has (deservedly) won a prize. In 2006, which must have been a particularly dull summer ('Coalition Approves Preliminary Draft of Proposal for .00034% Pension Contribution Rate Adjustment'), some reporter saved the day by discovering that the Dornfinger spider's natural habitat was moving north owing to global warming, bringing Austria and Germany within its spidery crosshairs.*

Finally, something to wet our collective pants about! Dornfinger triggers Hysteria, screamed one typical headline. The article notes that after a series of breathless press reports in Austria, 190 people streamed into the hospital in Linz in one day claiming to have been bitten by one, although only 8 'even came close' to displaying the symptoms. The spider's bite, needless to say, is non-fatal, although you might have a day or two of discomfort.

The German media's falling down these days. We need a crisis, and we need it fast. What'll it be this time? Horsemeat in your Wurst? Genetically-modified Lederhosen? The creeping menace of philtrum fungus? Come on, lazy reporters, start spreading the panic.

* The articles didn't mention how Southern Europeans have apparently managed to survive this fiendish predator's onslaughts for the last 8,000 years.

And speaking of spiders, can anyone identify this beast? About 3-4 mm long in total, crawling on the walls of my apartment:


Marijuana Is Winning the War on Drugs


The election brought good news. First, Obama's health-reform is safe:

This is the capstone of the Democratic welfare state, the
final big-ticket program that's eluded liberals for nearly a century. In
Joe Biden's memorable words, it's a big fucking deal. If Romney were
elected along with a Republican Senate, he'd almost certainly be able to
badly cripple Obamacare, even if he couldn't quite repeal it outright.
If Obama wins and keeps the Senate in Democratic hands, it will become
institutionalized. And like Social Security and other similar programs
that started out small, it will grow over time until, eventually,
America really does have universal healthcare.

The ideological debate about whether the government should ensure basic, affordable health-care for all will gradually wither away in the U.S., as it has in every other advanced nation. And something else happened: Colorado and Washington state voters decided to legalize marijuana. Oregon said no. Marijuana is, however, still considered a Schedule I narcotic under the federal Controlled Substances Act. This is the designation given to drugs that have a 'high potential for abuse', no medical uses, and are unsafe even under medical supervision. Officially, therefore, marijuana is considered as dangerous as heroin or LSD. There will be some interesting legal battles if the federal government tries to crack down in states that have decided to let their people enjoy dope.

In the long run, the specter of millions of people openly smoking marijuana and not turning into dead-eyed, shambling mendicants will inevitably undercut the rationale for keeping marijuana illegal. The Governor of Colorado, for his part, warned residents against breaking out the 'Cheetos or gold fish' too quickly. (For my foreign readers, he's not referring to crazed dope fiends eating live gold fish, he's referring to snack foods — see above — favored by cannabis conoisseurs). It's hard to paint weed as a terrifying, insidious threat when the Governor is openly joking about it.

The bigger story, though, is the U.S. Supreme Court. With some elderly liberal judges who may retire soon, Romney would have had a chance to change the Court's ideological complexion significantly. The Court is right now considering whether police should have the right to search your home based on the fact that a police dog 'alerted' — from outside — to the scent of marijuana inside it. This would be just the latest in a series of decisions giving police broad powers. Radley Balko points out how it all fits together:

But imagine what will happen if the Court finds that a drug dog's
alert is sufficient evidence for a search, and that a warrant is not
necessary: We may start sending SWAT teams into homes based only on the
results of taking drug dogs door to door.

In isolation, it might make sense to rule that it's reasonable for
police to break down a door in the middle of the night for a marijuana
search warrant. They need to get inside before the suspect can dispose
of the evidence. It might make sense for police to use extraordinarily
violent tactics in these raids, including putting guns to the heads of
everyone inside, including children, because they need to secure the building quickly, and they need to ensure officer safety.

It might make sense to rule that a drug dog's sniff is not a search
under the Fourth Amendment, because a sniff is relatively unintrusive.
There may be nothing unreasonable about ruling that a drug dog's alert
is enough to establish probable cause. After all, we all know that dogs
have a finely honed sense of smell. And finally, it might make sense to
rule that it is unreasonable to require prosecutors and police
departments to provide a particular dog/handler team's field history,
because doing so would place an undue burden on law enforcement

Taken in isolation, you could make a good argument that these are all
perfectly reasonable rulings. But put them together. By this time next
year, we could be facing this terrifying reality: Police could take a
dog/handler team into an apartment complex or to a row of townhouses and
have them sniff dozens, even hundreds of residences. That team may have
a history in which less than half the dog's alerts lead to any actual
recovery of narcotics. No matter. The police could then make note of all
the doors at which the dog alerted, and all of those residences could
look forward to middle-of-the-night visits from the local SWAT team.

A justice who has spent most of his career in lecture halls and high
levels of government may not see how all of that fits together. But any
decent criminal lawyer would.

California Voters May Reject Death Penalty in Favor of Life Without Parole

California will shortly vote on Proposition 34, which would end capital punishment in that state, where 725 prisoners currently await execution. This being America, even a bill to abolish capital punishment had to be given a tough-as-nails title: the 'Savings, Accountability and Full Enforcement' (SAFE) act. David Dow, abolitionist law professor, throws a spanner in to the works by pointing out that many death sentences which would be nullified by the act would be converted into true life sentences without any chance of early release (parole):

The justifications given by death penalty opponents who have embraced
life without parole reveal the extent to which abolitionists have
surrendered the moral basis of their position. It used to be that
abolitionists argued that most people who commit bad acts can change and
that the cruelest punishment one can inflict is to rob a human being of
hope. But this concept—I hesitate to use the word “rehabilitation”—has
seeped out of the criminal justice system over the past forty years.
Prisons are now designed almost entirely for security in mind and not at
all for socialization. Sentences have gotten steadily longer. And while
states are turning away from the death penalty, they are replacing it
with a different kind of death sentence. Sending a prisoner to die
behind bars with no hope of release is a sentence that denies the
possibility of redemption every bit as much as strapping a murderer to
the gurney and filling him with poison.

Opponents of capital punishment often point out that the United
States is the only developed Western country still executing prisoners, a
comparison meant to shame us for being aligned with such human
rights–violating countries as Iran, China and North Korea. It’s not a
bad argument, but exactly the same could be said about life without
parole. Our neighbors to the south don’t have it. Almost all of Europe
rejects it. Even China and Pakistan, hardly exemplars of progressive
criminal justice policy, allow prisoners serving life sentences to come
up for parole after twenty-five years. Meanwhile, the United States
imprisons wrongdoers for sentences that are five to seven times longer
than sentences for comparable offenses in, say, Germany. Yet the
recidivism rate in Germany is roughly 25 percent lower than ours.

There’s no question that touting life without parole as the moral and
cost-effective alternative to the death penalty has been a successful
short-term strategy. But then what? Is it really necessary to eliminate
any possibility of eventual release for all 725 people on California’s
death row? Charles Manson is not serving life without parole, but he has
been rejected every single time he has appeared before the parole board
and will die behind bars. Are some of California’s death row inmates as
monstrous as Manson? I suspect the answer is yes, and the parole board
could keep them in prison too. But there are scores, even hundreds, who
could be released at no significant risk to society.

I'm of two minds about this, as I'm sure Dow is as well. On the one hand, locking a 19-year old up for true life without parole is inhumane and inefficient. No matter how awful the crime he committed, the chance that he will still pose a threat to society at age 59 or 69 is trivial. Perhaps some inmates do need to be kept behind bars for decades, but the vast majority age out of their criminal tendencies. The decision whether to keep them in prison should be made by qualified experts on a case-by-case basis, not cast in stone at the moment of sentencing. As Dow amplifies in this interview (starting about 22:00), both the death penalty and life without parole convey the corrosive, cynical message that rehabilitation is doomed and that it's appropriate for society to give up on criminals.

On the other hand, American voters are still attached to the idea of the death penalty for the worst murders, so it's probably necessary to propose a reassuringly harsh substitute penalty. If you have to sell abolishing the death penalty to voters, life without parole may well be a necessary substitute.

But notice that 'if'. The problem here is that a major human-rights and public-policy issue is being thrown directly to the voters of California, or at least that share of them that plan to vote. There's something quaintly American about referendum-based direct democracy, but there are some issues — probably most issues, in fact — that are too complex and far-reaching to be responsibly decided by plebiscite. A couple of decades ago, for instance, California voters decided to pass a stringent anti-tax provision that, years later, continues to cause massive budget shortfalls and is contributing to the destruction of public higher education.

In my view, the way to a more humane criminal-justice system is not to ask voters to replace one uncivilized punishment with another, but to make a systemic change: to put criminal-justice policy into the hands of a select group of well-informed experts who can then counsel the peoples' elected representatives on the best way to prevent and respond to crime. In other words, to adopt the European policy-making approach. Unfortunately, this is a tough message to sell in the U.S.