Month: January 2014

No Bubble, Just ROCK!!! Vol. 8: 1997 Edition

Mellow is the Bubble

Still working on that ABA task force report, but a few weeks ago when I reminded you all that back in 1997 you were listening to the likes of Barbra Streisand, LeAnn Rimes,Shania Twain, and Chumbawamba, you passionately denied me. One of you went so far as to write:

I’m waiting for the “No Bubble – Just Rock” post that graces us with Shania Twain. I suspect that has about as much chance happening as the admins have of getting 40,000 lemmings to sit for the LSAT again.

Taking this as a challenge, I listened to Come on Over the following Saturday morning. Yeah, 40,000 LSATs isn’t worth subjecting you lost souls to the Nice Guyism of,  “If You Wanna Touch Her, Ask!”

Instead, I looked through my meager collection of 1997 music and found that I already used many of the bands in earlier NBJRs. Strange coincidence, I guess. So, here’s what I came up with.

We have the Sea and Cake, which I only started listening to a month ago.

Then Sleater-Kinney

…And what I was listening to at the time, the Makers:

Atlantic Chart One More Reason to Stop Using ‘Income Inequality’

I’m busy this week, and I’m working on a response to the ABA Task Force on the Future of Legal Education’s (final) Report and Recommendations.

In the meantime, the rumor is that “income inequality” will be the theme of B.H. Obama’s State of the Union Address. Paul Krugman put up a post Sunday arguing that Obama’s been “tougher on the one percent than most progressives give him credit for.”

His primary evidence is a chart put together earlier this month by The Atlantic‘s Jordan Weissman showing that thanks to the Patient Protection & Affordable Care Act and the fiscal cliff legislation from last year, the top one percent of households will pay a record high average federal tax rate (not marginal) going back in 1979. Quite a change, even if you think the one percent is merely a rhetorically expedient analytic concept.

Looking at the chart, your first question should be, does this include capital gains? The answer is, yes it does. That’s good on Weissman. Your second question should be, one percent of what? And there you’ll have to dig into Weissman’s source data from the CBO (PDF). Deep in the appendix (page 24), it elaborates on the definitions that appeared at the beginning:

Capital gains—Profits realized from the sale of assets. Increases in the value of assets that have not been realized through sales are not included in market income.

The CBO report defines income percentiles literally, as in, give us precise dollar figures for money that you received. As you can imagine, this leaves a lot out. Two households could have the same dollar income from the same types of sources to the same degree, but one might own vacant land parcels (taxed by state authorities not shown here) that collect imputed land rent while the other might be a renter who happens to make a lot of money. Okay, it’s a farfetched example, but the distinction is crucial. The CBO can be interpreted to agree:

The analysis does not assess trends in the distribution of other measures of economic wellbeing, such as household income measured over a longer period, household consumption, or household wealth.

These are very important dimensions of whatever “income inequality” is because they show household stability, the effects of debt on household consumption, and of course household assets, which tell you about the kinds of resources people have at their disposal. (Maybe “household inequality” hits too close to home?)

The CBO isn’t exactly clear why it’s conducting this study—sort of that the Great Recession reduced incomes and taxes, and well, this is what the CBO does. Sure, its data give some idea of how much households in various income percentiles have paid in taxes over the last few decades, and this can probably give a fairly accurate picture of “income inequality.” That is to say, I think Weissman’s work is valid, though I think Krugman is reaching.

However, “wealth concentration” is the far bigger, and more descriptive, problem. Undoubtedly, the country’s wealth is distributed to a relatively smaller number of households now than in the past, and the wealthy are hoarding it when it needs to be put to use to employ everyone. It’s an especially bad problem when you’re talking about wealth whose quantity is fixed, i.e. land.

It’s for that reason that I don’t like using the term “income inequality.” Imputed incomes matter because wealth concentration kills people, growth, wages, and the environment. I’m pessimistic the president will characterize it that way in his address.

Commerce Dept.: Legal Sector Hampered Recovery in 2012

Okay, it didn’t actually say that, but in its wholesale revision of its GDP-by-Industry data the Bureau of Economic Analysis (BEA) proclaimed this morning:

Overall, 20 of 22 industry groups contributed to the 2.8 percent increase in real GDP. … Professional, scientific, and technical services real value added—a measure of an industry’s contribution to GDP—increased 4.2 percent in 2012, continuing to reflect strong growth in computer systems design and related services.

Fifteen years ago, “computer systems design and related services” (computer services) was a junior partner to “legal services” in the “professional, scientific, and technical services” industry group. The legal sector’s share was a quarter of the total and computer services’ was about a tenth. Since the Great Recession, they’ve switched places: Computer services doubled its share; legal services lost a third.

Components of PSTS RVA (2009 $)

Computer services grew 12.6 percent in 2012, legal services -0.2 percent. Way to contribute to America’s recovery, lawyers!

However, in the price inflation race, the legal sector is definitely a winner. All services are 4.6 percent more expensive than in 2009, professional, scientific, and technical services grew 4.1 percent, computer services are 3 percent less expensive, and legal services are a whopping 12.7 percent more expensive than five years ago. I see this as more evidence that the most productive strata of legal profession are being wiped out because Americans are too poor to afford them at any price.

Regular readers might be curious why the above chart stops at 1997 and not 1977 as BEA data did in previous years. The reason is that the bureau excluded those years from its revision, and it used the term “superseded” to ensure that government data daredevils like me would think twice before using the older data. Nice try.

To see the impact the revision has had, here’s a rough comparison of demand for legal services (chain-type quantity indexes) between the last two releases and the new revision.

Legal Services Real Value Added Chain-Type Qty Index

The biggest difference is that the 2014 revision detects a spike in demand for legal services in 2008—probably bankruptcies and foreclosures—whereas in earlier GDP-by-Industry releases peak law was 2005. If you think 2008 is a fluke, a deviation from the general trend, then the “decline of law hypothesis” still holds: Aside from 2008, the year with the largest quantity output for legal services was 2004. (2007 came close though.)

In all three releases the impact of the Great Recession is substantial. The revision posted this morning shows the legal sector contracting 12 percent since 2004, and there are no green shoots in sight.

Encore NYC Lecture Announcement

Because of its success last month, the Henry George School of Social Science of New York City has asked me to give my college education/student loan lecture again in two weeks. Here are the details—note that the address is different and not at the school:

“College Education: Certain Debt, Uncertain Income”

6:30 PM, Wednesday, January 29, 2014

NYC Seminar and Conference Center

71 West 23rd Street (corner of 6th Avenue)

New York, NY 10010

“Space is limited. Registration required. Phone 718-721-2905 or email to reserve your place.”

As always, courses at the school charge no tuition. Here’s the abstract:

College Education: Certain Debt, Uncertain Income. Soaring costs for education, together with limited job opportunities and stagnant wage growth, place substantial financial and psychological burdens on students.

Noted columnist and researcher Matt Leichter reviews tuition inflation, cuts in public funding and the business of lending to students. Mr. Leichter will also propose reforms to the system of financing college education.

The last lecture went splendidly. I was on my feet for nearly three hours, the last of which spent answering questions. Hope to see you there!

Why the Stagnant Labor Productivity in the Legal Sector?

In my last Am Law Daily article, I discovered that contrary to all expectations, the quantity of private legal services provided per hour worked has stagnated for more than two decades. I think this is one of the most important insights I’ve come across, and I think the macroeconomic data on the legal sector is greatly undervalued in commentary on the future of law and law school. The lack of productivity increases certainly deserves a bit more discussion than I gave it in the article.

Legal Sector Labor Productivity

(Sources: BLS multifactor productivity tables, BEA, author’s calculations)

So, were lawyers (okay, legal sector workers, but I may use the term interchangeably) more efficient when they used paper reporters than LexisNexis?

Unlikely. I think there are other things going on here.

One, (private) legal services aren’t homogeneous outputs. An hour spent on a criminal defense matter isn’t the same as an hour spent on a landlord-tenant dispute or a corporate merger. It’s possible that many lawyers (and firms) have become more productive over the years, but the composition of the average hour of legal services Americans are buying has changed.

All this observation does, though, is raise the question of how the average hour has changed, and there isn’t much direct evidence on the subject. There are some indirect data. For example, American Bar Foundation (PDF) statistics show that since 1980, large firms have crowded-out smaller ones, though curiously solo practitioners are about as abundant as they ever were.

Percent Private Practice Lawyers by Firm Size

In 1980, only 7 percent of all private practice lawyers worked in a firm larger than 50 lawyers; in 2005, 20 percent did. But this doesn’t show much because in most circumstances we expect larger firms to be more efficient than smaller ones, so they’d cost less per client. On the other hand, Bill Henderson tells us that the employment composition of biglaw has changed since the 1980s as well, which I think can support the idea that the average hour of legal services has changed.

We also know that in general legal services have become more expensive over the years, even as the number of employed lawyers has grown. Legal services cost twice as much on average in 2011 as they did in 1985 in real terms.

Real Legal Sector Price Index

(Source: BEA, author’s calculations)

So how do you square the circle of more lawyers yet costlier legal services? In two ways: First, you can argue that demand for legal services is wealth and income elastic, i.e. the more money one has, the more they like spending it on lawyers and they buy different kinds of legal services too. And wouldn’t you know it, just this morning The National Law Journal reported that $1,000 per hour billable rates for “in-demand partners at the most prestigious firms” aren’t rare anymore. Second, you can argue that as Americans’ incomes and wealth decline, they’re unable to purchase the legal services that they used to, and the lawyers who formerly served them either move to a higher-priced market or go out of business.

The only alternative you’re left with is that there’s an attorney shortage, and all those “excess” law school graduates are really just lazy, greedy, entitled, and unwilling to make the tough sacrifices like abandoning their current lives and moving to rural America to serve the poor. However, this argument requires throwing out rational behavior assumptions and leads us to wonder why the supposedly efficient large firms won’t serve the poor if the greedy grads will not. The “market failure” line is ever wanting for an explanation.

If the composition of the average hour of legal services hasn’t changed, then the only way I can think of where we get the same (or less) output for the same effort despite technological advances and rising prices is by systemic fraud and cartelized behavior on a spectacular scale. Lawyers lie in lockstep about the cost of their services. Then they work fewer hours a week and take Fridays off. New lawyers attempting to enter the market, work more, and charge lower prices face threats and sabotage.

I’m sure plenty of people believe the above is true, but there’s scant evidence of it.


So we have stagnant legal sector labor productivity. I think it reflects wealth concentration rather than fraud.

Incidentally, clever observers might wonder how much it matters. Maybe increases in overall labor productivity have a long way to go to catch up to the legal sector’s, an observation that didn’t make the cut in my Am Law Daily piece. Indeed, most productivity gains over the last few decades have not gone to workers. Here’s a different measure, output per worker (instead of per hour, which is more precise).

Real Value Added Per Person Engaged in Production

(Source: BEA, author’s calculations)

By this measure, the legal sector has become 13.5 percent less productive between 2009 and 2011. This could mean that either all lawyers who didn’t lose their jobs in the Lesser Depression organized a work slowdown, or the Lesser Depression laid-off the most productive legal sector workers. In a variant of the latter, some practice areas might be more productive than others—especially those benefitting poorer clients and not the wealthy—and once poor people become destitute, an otherwise productive chunk of the legal sector goes out of business. Regardless, there may be significant deadweight workers in the legal sector.

What does this mean for the as-yet unmentioned prospective law student? As I wrote in the article, law will only consistently pay off for those who can serve the wealthy, at least in the short term. Also, as the largest purchaser of law graduates’ labor, the legal sector sets their wages. If legal sector productivity has stagnated while other sectors become more productive, there are probably better long-term opportunities than law.

A crucial independent variable here is how long the depression will last. Given the dismal December 2013 Establishment Survey figures (and the Obama administration’s shameful spinning of them), things are bad. Here’s the employment-population ratio for 16 to 54 year-olds and my projection of them based on the positive growth since September 2011.

Civilian Employment-Population Ratio (16-54)

(Source: BLS)

If the legal sector is sensitive to employment levels and wealth concentration, then it’s going to be a long while until law starts paying off consistently from the demand side. From the supply side, obviously, there are far fewer people going to law school, and I’m hopeful (yes!) that the median graduate in a few years will have less law school debt than in previous years. It’s also obvious that the trivial accounting identity holds true: The first person who doesn’t go to law school is the first not to be unemployed after graduating. The real questions are (a) whether the demand-side factors really are as bad as I think they are, and (b) whether some law schools’ reputations are so insubstantial that legal employers would rather hire an unemployed graduate from a better-regarded school.

How Much Is the Land in America Worth? (Redux)

The land-taxers I know are pleased with Wonkblog’s decision to hand “land value taxation” its coveted “most worthwhile yet hopeless policy crusade of the year” award for 2013. I guess the land value taxation pilot program Connecticut approved last June isn’t good enough. However, Wonkblog courteously acknowledged Mason Gaffney’s work on the subject.

Aside from linking to the Slate post on the topic that I discussed back in October, Wonkblog linked to another one from December in which Matthew Yglesias informs us that his correspondents told him that the Federal Reserve’s Flow of Funds report contains enough data to calculate the value of privately held land in the U.S. The number? $14.488 trillion. He concludes:

So who cares? Well, you should care. This number is high enough that it tends to confirm that [sic] view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges could replace all taxes on labor and investment and still fund an ample welfare state and public sector.

Lamentably, Yglesias doesn’t show his readers why $14.5 trillion in land value “tends to confirm that view that taxation of land and other natural resources … could replace all taxes on labor and investment.” Indeed, his statement implies that the only thing standing between handing every American a citizen’s dividend equivalent to median household income is a posse of mustachioed landowners.

Alas, this is not how land value taxes work, but Yglesias’ vague editorial provides an opportunity to discuss the difference between “land value” and “land rent.” Land rent is the annual amount one pays to use land. Land value is the purchase price of real estate absent improvements. Land rent is like annual income; land value is like lifetime income once you’ve accounted for your JD premium. The ratio of land rent to land value is the “capitalization rate,” a percentage that differs among cities. Basically, it’s the discount rate; the higher it is, the lower the land value.

When Georgists talk about taxing land rent, the calculation is easy: Just multiply the rental value by the percent to be taxed. Let’s say we have a parcel that rents at $100,000 annually. Divided by a capitalization rate of 5 percent, its land value is $2 million. If we want to tax 80 percent of the land rent, we get $80,000 in land rent tax. Easy-peasey.

Now, like the typical Slate reader you’re thinking, “Why not tax land values instead? Wouldn’t an 80 percent tax on that yield $1.6 million?” And it’d be a good question—two even. The reason is that the amount taxed gets subtracted from the rental value, so as the land rent tax goes up, the land value drops. The rental value, however, remains the same. Here’s the equation:

Land Value = (Rental Value ­– Tax Amount) / Capitalization Rate

So taxing $80,000 from our parcel leads to a net rental value of $20,000 divided by a 5 percent capitalization rate and we get a land value of $400,000, not $2 million. If we want to express the land value tax as a percentage, then we modify the equation:

Land Value = Rental Value / (Capitalization Rate + LVT Rate)

…And then solve for the land value tax rate. In our case, it’s a 20 percent land tax on a $400,000 parcel, not an 80 percent tax on a $2 million parcel. Got it? Good.


So we have a $14.488 trillion chunk of land that Yglesias believes tends to confirm the view that land taxes can finance an ample welfare state and public sector. Unfortunately, he gives readers neither his estimate of the land’s rental value nor that of the capitalization rate he used to close the accounting identity detailed above.

I can help. I’ll assume a generously low capitalization rate, 3.88 percent, the same as the current yield on 30-year T-bills (the aforementioned Gaffney recently demonstrated that wealthy people get much lower discount rates than poor people). We get a mere $562.1 billion in taxable land rent, which isn’t even enough to cover the federal deficit.

Now’s the part where Slate readers might question why Yglesias thinks this is sufficient to finance an ample welfare state and public sector, but they wouldn’t realize that government at all levels collected about $4.3 trillion in taxes in 2012. Add that back to annual GDP and we have $21.1 trillion to work with. How much of that is land rent? Again, we’ll have to fill in the annual rental value because Yglesias does not. Let’s say it’s only 20 percent, and we get $4.2 trillion in taxable land rent and at our 3.88 percent capitalization rate, $108 trillion in pretax land value.

You can tweak the capitalization rate and the percent of land rent as a share of GDP, but I think 20 percent is too low, if only because by the time you tax the land value down to $14.5 trillion as we do now, governments get less revenue than under the current tax system. This is implausible. Raise the percentage of GDP that goes to land rent to 30 percent, and you have well over the $5.7 trillion U.S. governments currently spend. Anything more is Hanukkah.

Of course, none of these calculations account for the increases to national income by recovering the deadweight losses imposed by our current tax system or the costs of administering it. Nor do we know if the Fed’s assessments undervalue land, which I—as does Gaffney—bet they do because hiding wealth in land is a time-honored practice. So yes, we should be confident that there’s enough land value (plus other rents, like spectrum rights, mineral rights, IP rights, etc.) to finance government and the welfare state, but a $14.488 trillion land value assessment alone is insufficient to prove it.

LSAT Tea-Leaf Reading: December 2013 Edition

Fresh from the LSAC: 28,363 LSATs in December 2013, a record low as far back as the LSAC data tell us (1987). The previous record we know of was December 1997 when you were all still listening to Alanis. Okay, be honest, you still are.

No. LSAT Takers, 4-Testing Period Moving Sum

The four-testing period moving sum is still a tad higher than February 1999 (105,319 now versus 104,236 then). I don’t think it’ll hit the record low by February or June of this year, but it might in the future.

Notably, the December decline has sharply decelerated (accelerated, technically, I guess). Unlike the double-digit percent declines over the last three Decembers, this one was only a -6.16 percent drop. It’s more evidence that the LSAT bottom is approaching.

With 105,319 calendar-year LSATs, and assuming a ratio of 1.94 LSATs to subsequent year applicants, like last year, there would be 54,300 law school applicants this fall. So far, the initial applicant estimate is lower than that, implying the LSAT-to-applicant ratio will be higher this year. The most recent applicant projection is unchanged between December and now, ~51,300.

[UPDATE: Jagged Little Pill had finally fallen out of the Billboard 200’s top 10 albums by February 1997. Nevertheless, you were still listening to it that December. You were certainly out buying Celine Dion’s Let’s Talk About Love, Barbra Streisand’s Higher Ground, LeAnn Rimes’ You Light Up My Life: Inspirational Songs, Shania Twain’s Come on Over, and of course, Chumbawamba’s Tubthumper. The LSTB greatly regrets possibly misleading readers on ’90s music history.]

Carnevale’s (and Obama’s) College Jobs Clock Is Ticking

For some reason, last month the Orlando Advocate published the White House’s response to the petition drive to forgive student loan debt to stimulate the economy. I say “for some reason” because the administration’s response first appeared in October 2011, not December 2013.

Nevertheless, one of the administration’s factoids stuck out:

Over the past three decades college tuition has grown 10 times faster than a typical family’s income, making higher education unattainable for many; however, more than 60% of jobs in the next decade will require more than a high school diploma. It is more important than ever for Americans to get a good education to stay ahead in an increasingly global economy. [Emphasis LSTB]

President Obama parroted this line a few weeks later:

Now, I mentioned that we live in a global economy, where businesses can set up shop anywhere where there’s an Internet connection.  So we live in a time when, over the next decade, 60 percent of new jobs will require more than a high school diploma. And other countries are hustling to out-educate us today, so they can out-compete us tomorrow.  They want the jobs of the future.  I want you to have those jobs.  (Applause.)  I want America to have those jobs.  (Applause.)  I want America to have the most highly skilled workers doing the most advanced work.  I want us to win the future.  (Applause.) [Empasis LSTB]

I love this line because it’s so absurd while scoring points on America’s trade paranoia. In Obama’s worldview high-paying jobs are a zero-sum game (but don’t worry “free trade” agreements are good for some reason).

Interestingly, the 60 percent figure is possibly an upward revision from the president’s 2011 State of the Union Address, where he said that more than half the jobs over the next decade would require a college degree of some kind. He emphasized the importance of having the highest proportion of college-educated workers in the country compared to others, as though that metric alone is a measure of “competitiveness,” whatever that means.

The 50%-60%+ figure raises an eyebrow, and I was curious where the president got it from. My best guess, and one confirmed by jurisdebtor’s comments here, is the LSTB’s old friend, the Georgetown Center for Education and the Workforce. In a paper titled, “Help Wanted: Projections of Jobs and Education Requirements Through 2018,” authors Anthony P. Carnevale, Nicole Smith, and Jeff Strohl argue that the BLS’s employment projections systematically underestimate the future demand for educated workers. So great will the demand for college education be that by 2018, the U.S. will be short 300,000 college graduates annually. Holy cow!

How does the GCEW arrive at such alarming conclusions? Well, you’ll have to turn to Appendix 4 for that. Really, did you expect such a crucial methodological disagreement that forms the backbone of the paper to be discussed up front?

BLS’ educational and training requirement data undercount postsecondary degrees by 22 million in 2008. This implies that 22 million workers are overeducated. The overwhelming consensus in the literature contradicts this. (127)

The primary cause of this discrepancy, according to GCEW, is that the BLS misses “upskilling,” e.g. auto mechanics today require more training than they did 30 years ago, but the BLS still classifies the occupation as one requiring only a high school diploma.

The problem with GCEW’s analysis is that the issue is not how much upskilling is going on in each occupation; rather, it’s the distribution of overqualified workers in each occupation. In other words, what occupations do the 22 million overqualified people work in?

Thanks to the BLS’s update of its employment projections, we have an answer. Here’re the top 20 occupations held by the 12.8 million underemployed bachelor’s degree holders that require a high school education and less. These 20 account for more than half of the 12.8 million workers.

Percent of 12.8 Million BA's in HS & Less Jobs

Not seeing any auto mechanics here, but in fairness I can see some managers benefiting from a college education. However, Carnevale et al. are going to have to show why we should believe retail salespeople who have a bachelor’s degree are more productive than their high school graduate counterparts.

To give you some more bare numbers, for those with a bachelor’s degree and higher, 15.9 million people are working in high school and less jobs. The overall underemployment rate for those with any kind of college degree (including, e.g. PhDs working in jobs that require only a BA) is 36.7 million. By contrast the number of college-educated workers in jobs for which they are qualified or underqualified is only 20.5 million.

As for the future, of the 55.7 million jobs that the BLS now predicts will be created by growth and replacement by 2022, only 30 percent will require anything more than a high school diploma. 23.4 percent will require a bachelor’s degree or more.

In short, the GCEW has four years for 15.9 million Americans aged 25 and over with a bachelor’s degree or more to find jobs that fully use their credentials, to say nothing of everyone else who is still underutilized like well-educated nurses. The Obama administration, though it ends in 2017, has until 2020 for the prediction to come true.

Happy New Year. The college jobs clock is ticking.

NYT Thinks Student Loan Poverty Is Good for the Economy

Natalie Kitroeff, “Loan Monitor Is Accused of Ruthless Tactics on Student Debt,” New York Times, January 1, 2014.

Regular readers of the LSTB might know the Education Credit Management Corporation as the creditor in student loan bankruptcy adversary proceedings (and their inevitable appeals) that demands bankruptcy courts order aged, unemployable debtors to sign on to Income-Based Repayment instead of discharging their loans. In an article about ECMC’s abuses of federal student loan debtors, the Times barfs up this howler.

There is $1 trillion in federal student debt today, and the possibility of default on those taxpayer-backed loans poses an acute risk to the economy’s recovery.

Holy crap there’s a lot wrong with this line.

(1)  Not all $1 trillion in federal student loans will be defaulted on. (Okay, the proportion of balances in default is 11 percent, but that’s because the loans aren’t dischargeable, not because they’re threats to the economy).

(2)  Defaulting on these loans would do the opposite of endanger the real economy for a few reasons. One, poor people who default on their loans will spend money on real goods and services instead of debt. Two, the loans are owed to the government or banks whose loans are guaranteed by the government. The bank bailout is either already in place or the loans are self-bailing out (I prefer “auto-TARPing”).

(3)  If defaults are a problem, then the Times should tell us why IBR is such a great idea. There are many people whose loans are so large that we know ex ante to repayment that they’ll never be paid off, especially law school debt. I guess the economy of 2030 can handle IBR loan cancelations better than it would today.

Then a law prof weighs in:

[Stanford University law professor G. Marcus Cole] added that if it were easy to discharge student loans in bankruptcy, lenders would simply not lend money to students without clear assets or prospects. “We need a standard like that to be able to allow students who can’t afford an education to be able to borrow,” he said.

Why should the government be loaning money to people who don’t have clear assets or prospects?

[In 1990] Lawmakers began arming the Department of Education with a set of unprecedented collection tools, including the ability to garnish debtors’ wages and Social Security, and appropriate their tax rebates.

The changes helped cut default rates from a high of 22 percent in 1990 to around 10 percent in the 2011 fiscal year.

As stated above, the 10 percent default rates are not a benchmark for success.

10.5 Delinquencies Up

Here are some questions to keep in your head for the next couple of decades as the government procrastinates on the federal student debt bubble:

(1)  How much federal student loan debt will have to be written-down because it’s unpayable?

(2)  How much will student debt interfere with people’s living standards and retirement saving?

(3)  How will the write-down come about?

(4)  When will it come about?

(5) Who will pay for it?

(6)  Just how acrimonious will it be?

I can tell you right now that so long as the Times thinks it’s bad for the economy when the government isn’t grinding people into poverty with predatory loans, the procrastination will continue.