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There is a reason why US consumer revolving (credit card) credit growth is getting lower and lower and lower and at last check posted a mere 0.2% annual increase.
That reason is that as the NY Fed disclosed moments ago, federal student loans officially crossed the $1 trillion level for the first time ever. Notably: the quarterly student loan balance has increased every quarter without fail for the past 10 years!
And just to prove that while credit card balances are plunging due to more stringent bank repayment requirements, this is more than offset by borrowers shifting to student loans, where the delinquency rate on student loans is soaring and has just hit an all time high of 11.83%, an increase of almost 1% compared to last quarter. Even according to just the government lax definition of delinquency, a whopping $120 billion in student loans will be discharged. Thank you Uncle Sam for your epically lax lending standards in a world in
which it is increasingly becoming probably that up to all of the loans will end up in deliquency.
Three weeks ago, during the US government shutdown fiasco, and when there was legitimate concern if the US would begin prioritizing debt payments upon running out of cash, China’s official and most widely read press agency, Xinhua, slammed the US in “U.S. fiscal failure warrants a de-Americanized world” in which it called for a new world order, and an end to the reserve currency. Now, it is time for the follow up, with China kicking “America the eavesdropper” precisely when it is down.
The trust fiasco of America the Eavesdropper
The latest outburst of outcries and outrage across the world has laid bare that almighty America has at least one other anomalous addiction besides borrowing — bugging.
The U.S. debt drama features a polarized and paralyzed Washington at the helm of the world’s largest economy. As nerve-racking as it is, such irresponsible behavior is a recurrent headache economic policymakers worldwide can bear with.
Yet the sole superpower’s spying saga is spicy on a heart-attack scale. It is particularly hurtful to those supposed to trust America the most — its allies.
The recent cascade of eye-popping disclosures depicts a hyperactive Uncle Sam prying into others’ secrets and even eavesdropping on dozens of heads of state.
It has been revealed that the U.S. National Security Agency (NSA) monitored the phone conservations of at least 35 world leaders in 2006. And that is just a tip of the iceberg of the spook organization’s sprawling spying scheme.
Leaked documents show that the NSA has not only gained front-door access to countless Google and Yahoo user accounts through a court-approved process, but secretly broken into the main communications links connecting the two Internet giants’ respective data centers around the world to siphon information at will.
What is counterintuitive in the NSA forage is its nonsensical approach: relentless and indiscriminate like a vacuum cleaner. It just bugs everybody, even its closest allies in Europe.
In the most shocking revelation so far, Uncle Sam turned Madame Europa, German Chancellor Angela Merkel, into, as Deutsche Presse-Agentur puts it, “a dupe whose mobile phone conversations were for more than a decade a source of information for U.S. authorities.”
Merkel and her peers in the U.S. alliance have every reason to feel insulted and betrayed. At the very least, they deserve the kind of respect and trust that underpins the practice that air travelers do not have to fly naked.
The motivation behind America’s extensive eavesdropping is unclear. The explanations the White House has been forced to offer are far from explanatory, and the diorthosis President Barack Obama has promised seems all but skin-deep.
The half-heartedness stands in stark contrast with the pushfulness with which America accuses China of cyber-espionage, and the evasiveness marks a stunning retreat from the straightforwardness with which Washington reproves Beijing for alleged monetary manipulation.
The apparent application of a double standard only reinforces the image of a Janus-faced America. In the sunlight, it preaches; in the dark, it pries. On the offensive, it orates; on the defensive, it equivocates.
The wayward practice has now backfired, and the damage is increasing. Just as the borrowing addiction is shedding America’s economic credibility, the bugging obsession is draining its political and security trustworthiness — only with potentially more destructive consequences.
Trust is the first and foremost casualty. Common sense dictates that trust is a two-way street: One has to trust in order to be trusted. It is particularly true in friendships and alliances. America obviously failed to follow the simple rule.
If Washington did not knit the worldwide wiretapping web just because it could, then its pillage for information unveils an Uncle Sam too deeply entrenched in suspicion and isolation to treat anyone as a real friend.
Ironically enough, the bugging undermines the very thing it is supposed to protect — national security. As America pins its security on alliances, the tapping tale would sour its relationship with allies — and thus erode its security bedrock — more than any terrorist would be capable of.
The harm could go far beyond. For example, mutual trust is vital to China and America’s endeavor to build a new type of major-country relations. Washington’s lack of trust and hemorrhage of trustworthiness would only make the effort more difficult.
Needless to say, trust entails trade-offs, and the quid pro quos are not riskless. But the United States should be wise enough to know that to trust nobody is no less dangerous than to trust anybody.
As indicated in the still simmering spying scandal, the potential cost of excessive bugging could be way higher. Uncle Sam needs to remember what happened to the tailor in the Lady Godiva story — Peeping Tom was struck blind.
- Cartoon: The Eavesdroppers (englishblog.com)
- On Twitter, Eavesdropper Reveals Former NSA Head’s Train Chat – New York Times (nytimes.com)
- Chinese Media Calls America ‘Peeping Tom’ In Troll Over NSA Spying Scandals (businessinsider.com)
- How Can Any German Be Sure Merkel Wasn’t Blackmailed By NSA? What About Americans? (politicaloutcast.com)
- Obama causing the entire world to hate America: Spying, currency devaluation, torture and more (thedailysheeple.com)
- Germany to send intel officers to U.S. (cnn.com)
- History of Economic Analysis (joseywales1965.wordpress.com)
- Projections on Economic Collapse (Reblog) (repressedexpressions.wordpress.com)
- Theory, History, & Ideas (orrinwoodwardblog.com)
- (Another) Bad Day for Economists (boomerbeat.wordpress.com)
- Economics, cognitive science and social cognition (manwithoutqualities.com)
- Our Global Ponzi Scheme (resilience.org)
- 77 Years Of Being Wrong About Social Security Just Hasn’t Been Enough (businessinsider.com)
- Abenomics: The Biggest Ponzi Scheme in History? (business2community.com)
- Osborne’s Housing Ponzi Scheme (think-left.org)
- The Federal Reserve – A Study In Fraud (economicnoise.com)
- Regulatory strategy for savings/investment schemes, that would address ponzi schemes (citizeneconomists.com)
- Funds guru accused of NZ’s biggest Ponzi scheme (gulfnews.com)
- Further Thoughts on Whether or Not Social Security is Ponzi Scheme (cafehayek.com)
- Bernie Madoff And The Best Ponzi Scheme Of All Time (thepoliticalpixie.wordpress.com)
- Court Tries to Reach Deals With NC Ponzi ‘Winners’ (abcnews.go.com)
- New Zealand charges man over $317m Ponzi scheme (arunbabyveranakunnel.wordpress.com)