Student Loan Bubble Might Soon Burst? Glad I don't have Sallie Mae Bonds

Well it seems that putting oneself in massive debt for a college education might soon bite the economy in the ass.

Research done by the Federal Reserve and Equifax also paints a dismal picture for student loans. Outstanding student loan balances increased $10 billion during the fourth quarter of 2012 to reach a total of $966 billion. Even more concerning was that the number of borrowers who have fallen behind on their student debt by at least 90 days continued to climb higher. In the fourth quarter, it surpassed the delinquency rates of credit cards to reach 11.7 percent. Thirty-five percent of people under 30 years old who have student loans are at least 90 days late on payments, compared to 26 percent in 2008.

So 35% of loans given to people under 30 are more then 90 days or more late? What is worse is that college tuition doubles every 9 years so these numbers will only get worse the further along we get. I can see many graduates decide to go into bankruptcy due to hopelessness to get their loan debt off of their backs. There will be quite a few 30 somethings that can declare hopelessness because they are underemployed. So they get a job at Dairy Queen with their PHD in Medieval Literature (or are denied a minimum wage job due to over-qualification) and they can dump their loan debt.This rush for the exits will pop the bubble.

One thing I can easily see happening is Obama forgiving these loans if things get too hairy. He is all about taking accountability away from the students. After all they were just kids were dupes who were fooled by to bond-bundling Wall Street-types. Then a bailout will happen. However if you are a Sallie Mae bondholder you will get some awful haircut. After all Obama is making you lose money "so the students don't have to hurt."

I Have to Agree With Ron Paul: the Boston Lockdown was Too Excessive

Well its very rare that I agree with both Ron Paul and Bill Maher at the same time. Ron Paul said this:

These were not the scenes from a military coup in a far off banana republic, but rather the scenes just over a week ago in Boston as the United States got a taste of martial law. The ostensible reason for the military-style takeover of parts of Boston was that the accused perpetrator of a horrific crime was on the loose. The Boston bombing provided the opportunity for the government to turn what should have been a police investigation into a military-style occupation of an American city.

While Bill Maher said this:

Maher also said that America is becoming a “police state.”

“I want to talk about the police, who I am a supporter of… Look at this, I mean if this is what you have – why don’t you invade a country? …. I mean go up to Canada – take their oil… This country is becoming a police state. And it is very troubling to me,” Maher said, while showing pictures of police officers patrolling the city and searching for Tsarnaev.

Yeah I think shutting down Boston to catch one guy is way too much of a response to terror. That sets a precedent when the next bomber strikes an entire American city will shut down in order to catch him. Or if the city isn't shut down and the bomber strikes again everyone points the finger at the police.

If the Al-Quida scumbags were smart they would do this every few months until America freaks out. They could even change things up by bombing one month then a spree-shooting the next. I don't think America has the stones to endure terror in the same way that the Israelis have in the past decades.  

Say What! Instagram Owns All of Your Pictures and Can Sell Them to To Unscrupulous Ad-Men?

Well, time to delete my Instagram account as well. This is absolutely unethical and I hope everyone jumps ship to Vine whatever picture app is out there that people are currently using. Hell, just getting your photo developed at Wal-Mart is preferable to this:

Today Instagram announced that it will be changing its policy to fall into line with Facebook. From mid January 2013, everything you post on Instagram (or have posted) will be deemed to be usable commercially. Unless you remove content before the date, you will be deemed to have given permission for that content to be sold to advertisers for use in ads. Let’s think of an example. You go to Starbucks and take a photo of a coffee cup and a cake and you upload it to Instagram with “Starbucks” in the caption. Next thing you know, that picture is showing up on the timeline of your Facebook friends under a “Sponsored” banner with the news that you love Starbucks. Even if you don’t.

What is worse is that Instagram just became a massive stock photo repository. So that picture of you in an office setting can now be used by Xerox to shill their copiers. Or that picture of a woman out with her friends at the local bar wearing a skimpy dress can be snagged by Skinny Girl to sell flavored vodka. Every one of your pictures can now be used by advertisers and you don't see one thin dime.

Or even worse get used in a "Get Checked for Venereal Disease" campaign waged by the local free clinic. I can just see a picture of a 20-something woman sitting next to a man at a bar with a big smile on her face. The original Instagram caption was "Look it is Mary-Anns new man!!!!"

That caption has been changed to "This Woman has Chlamydia! Go to Cleveland Free Clinic for Your Shot Today!" and has been blown up to poster size and sores have been Photoshopped onto her face. Mary-Ann cannot sue Facebook because that content belongs to them. It no longer belongs to her or her friend who posted the pic with that Instagram app. As soon as those pixels move from the camera on her friends phone to Facebook's data center it is now usable by anyone that writes a check to Facebook.

In fact, she may not have even known that her friend uploaded the picture to Instagram in the first place. After all it was mixed in with a whole bunch of photos posted that night by all her friends. In fact Bacardi has already used one of her and the"Applebee Brunch Bunch" making a toast in their "Take Your Gals Out on Bacardi" ad-campaign.

All Mary-Ann knows is that she when she walks into her doctors office to get a boil lanced her likeness is staring back at her from the cork-board next the receptionist. Yeah, time to delete your Instagram and tell your friends to do like-wise. I mean if you are in their pics, and they are on Instagram, you are back on unpaid-endorser duty as soon as Facebook gets their hands on your pics.

Yet More Reasons to Delete Your Facebook Account: Your Friends Can Hurt Your Privacy

Well, I'm still glad I deleted my Facebook account years ago. Your privacy seems only as good as the amount of trust you have in your "friends."

In other words, you can restrict your own likes to your friends, but if those friends use apps in an open way and decide to share more information than you would want them to, tough luck.

The short reality is that you cannot actually control your privacy on Facebook. No matter how many lines Facebook adds to its privacy statements or how many granular controls it adds to your account settings – the whole system of you being in control of what people see about you falls over completely because anything any of your friends does can make you public.

So if they like your picture even in you are in the "walled garden" you are suddenly out in the clear. Your privacy depends on how many times your "friends" have clicked like on your content. So if your friends are clueless newbies and like-everything you are in the open. Facebook can use your content for whatever purpose simply because your friend liked it.

This part is equally insidious.

Additionally, I might like the Starbucks page just to enter a prize draw, then my name and picture will appear in adverts for my friends to see, showing me endorsing Starbucks. Great. Way to go Facebook.

So in other words you become an unpaid endorser of Starbucks as soon as you click that Like Button. Your unpaid endorser friends also appear on your own Timeline if they click that Like Button as well. Yeah that sounds like something worth getting into.

Cure for AIDS Nearly Complete

Well, this might be cause for celebration in many circles.

1. Normally, the HIV virus hides out in "reservoirs" it builds for itself inside infected DNA cells. But this treatment flushes HIV from behind its battlements using a class of compounds called HDAC inhibitors, which are typically used to treat cancer.

2. Once HIV is flushed from its hideout, the body's own immune system — turbo-charged by a separate vaccination — can then seek out the newly vulnerable virus and eliminate it. The hope is that every single bit of the HIV virus becomes

That second part might need to be tailored per individual and does not sound very cheap. It is much better than a lifetime of taking Anti-AIDS drugs though. In any case I remember AIDS being so scary when I was a kid. Now they might cure it. Maybe Cancer will be next?

Facebook Defections In the Millions

Well, this might be start of the long fall off if Facebook isn't careful.

In the last month, the world's largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK.

Users are also switching off in Canada, Spain, France, Germany and Japan, where Facebook has some of its biggest followings. A spokeswoman for Facebook declined to comment.

It seems to be growing in Latin America but it isn't like tons of ad money will be coming out of that region. You just can't value the company at $64 billion if the visitor count keeps dropping like this. What is bad is that these are people that probably won't come back to Facebook unless something really drastic happens. I wonder how many of these people had Facebook for years and how many used it for a few minutes and left after finding nothing much to do?

Internet Firsts. Wow The First Uploaded Picture is Awful

These are pretty cool firsts. However, these girls are good looking but this picture itself is freaky looking. I think it is the weird glove on the girl on the right. It makes me think of Silent Hill or something.

Teens Dump Facebook in Droves

Well I guess teens of today are just not the same thing as teens of 5 years ago.

The chart shows that the 18-24 year old group lost the largest amount of users in the last 3 months at over 2 million. The second largest group was the 25-34 year olds at nearly 2 million users. Ironically the only group to gain was the 65+ year old group that likely diminishes the younger groups desire to stay on the site. Its one think to deal with a nosy parent, but showing your wild party pics to your grandparents is a whole different issue.

So older people take up Facebook as their kids and grand-kids start to jump ship like crazy? That does not bode well for Facebook and it doesn't take a Facebook Phone to stop the slow bleedout. I don't agree with this statement though:

As with all of the monetization plans of Facebook, the investment community always overlooks the number one fact. All social networks eventually die whether a virtual network such as MySpace or a real world network of high school or college friends.

Social Networks don't die but merely morph into something different. I think the idea of Facebook connecting you with 100s of "friends" was overrated. Most people only have a few close friends and you don't need Facebook to interact with them. If I want to contact my friend I just text them or call them. If they moved away I would Skype them.

I remember Zuckerberg saying when he was rolling out the Graphs Search function saying you can use it to search for the word Paris. Then your friend's Paris trip photos and info would pop up. He made it sound like you didn't even know your friend went to Paris. That really isn't a friend but an acquaintance at best. If a good friend went to Paris you probably had a way to look at their pictures in real time via text or connect to a 100 different picture sharing sites. People are just bored of Facebook and every user they lose is a loss for life.

Kid Wears NRA Shirt and is Arrested for Starting Riot! Um, Overreact Much?

Well this is yet another example of why public school in America is full of crap.

At lunchtime, Marcum maintains, a teacher confronted him about the shirt. When Marcum said he would not take off the shirt or turn it inside out, the teacher began yelling, which caused a cafeteria scene.

“I believe the teacher was acting beyond the scope of his employment,” White told ABC. “What the video shows is that students did step up on the benches to the tables in the lunchroom when they were escorting Jared out of building. Kids jumped up, clapping.”

Yes the teacher who remains unnamed (probably due to Teachers Union pressure) yelled at a kid because he would not take off an NRA T-shirt. The shirt was not against the dress code just like a "No GMO" shirt would be. The teacher just did not like "that kind of free speech" and decided to make an example of this kid. The idea that the kid was arrested absolutely boggles the mind. I'm sure the ACLU is rushing to this kids defense as well.

Ancient European People Suddenly Vanished! I Suspect UFOs

This is one strange conundrum for archaeologist that study ancient European peoples.

"What is intriguing is that the genetic markers of this first pan-European culture, which was clearly very successful, were then suddenly replaced around 4,500 years ago, and we don't know why," said study co-author Alan Cooper, of the University of Adelaide Australian Center for Ancient DNA, in a statement. "Something major happened, and the hunt is now on to find out what that was."

I suspect that the early European peoples were taken en-mass by aliens for breeding and the re-population of their horribly scarred world. Eventually the humans died out because 4500 years of inbreeding made them horrible man-beasts. So that is why the aliens came back to study the current culture to see if they have to make another harvest of human breeding-stock.

Blackstones Comes to Their Senses: Drops Dell Bid

Well this is more evidence that Blackstone is one of the better money managers in the business.

The firm is withdrawing its offer, which valued Dell shares at about $25 billion because of "an unprecedented 14 percent market decline in PC volume in the first quarter of 2013, its steepest drop in history, and inconsistent with management's projections for modest industry growth," according to a letter sent to Dell. 

Earlier this month, technology research firm International Data Corporation said PC shipments in the U.S. fell fell 13.9% year-over-year to 76.3 million units in the first quarter, sharply worse than the 7.7% the firm had forecast.

Dell is a dying duck and paying $25 billion for a company that derives most of its sales from a product that might be totally commoditized in less than 5 years is setting that money on fire. I mean Dell will not be able to compete with low cost PCs from China and scramble for a market that is rapidly shrinking due to mobile. Some companies are taking 7 years to refresh their PCs (instead of 3 - 5) and might just refresh them to low cost Chromeboxes or tablets with docking stations, keyboards, and monitors.

I mean I was in Verizon the other day and the sales rep did his entire sale on a tablet with a little payment peripheral plugged into it. I can see many other sales and retail companies following this model and just forgetting about a PC all together. It just depends on how fast their business software turns into Android or IPhone apps. In any case Dell like HP will become the next Blackberry if they aren't careful.

CFO Out at Microsoft but Ballmer Still Remains!

Well its rats off the sinking ship time at MSFT.

Microsoft said on Thursday that Chief Financial Officer Peter Klein was leaving the company, as it struggles with sharply declining personal computer sales and a lukewarm reception for its new Windows 8 operating system. 

Klein, an 11-year Microsoft veteran with 3 1/2 years as CFO, is the latest in a line of top-level executives to leave the company, following Windows head Steven Sinofsky last November. Some have questioned whether Chief Executive Steve Ballmer is still the right leader for Microsoft, whose shares have remained essentially flat for the last decade.

There is nothing like a decade of being in a trading range. I think Ballmer has family members of the MSFT board of directors being held hostage in an undisclosed location or something. A decade of being late to nearly every party should have cost this guy his job when the Zune was a dismal failure.

New Batteries Might be Able to Charge 1000 times faster

Now I want this invention to be fast tracked.

One might think that such a powerful battery would requie ample time to recharge the device, however this isn’t the case. The batteries are capable of charging 1,000 times faster than competing technologies, thanks in part to the fact that they are 30 times smaller.

“Imagine juicing up a credit-card-thin phone in less than a second,” the university’s press release reads.

If you can add this to something like a powermat then it will change the world. I would just love the idea of putting my phone on a small mat before boarding a long flight and it is charged just like that. I wonder if these powerful mini batteries can go into cars? I would love to have an electric car that charges to full in the time it takes to fill up a tank of gas. 

John Paulson Lost $1 billion in 2 days!

Wow, now imagine all of the things he could have done with that $1 billion that he lost over two days time.

The metal’s drop wiped out almost $1 billion of hedge-fund manager John Paulson’s wealth in the past two days. The 57-year- old began the year with about $9.5 billion invested across his hedge funds, of which 85 percent was in gold share classes. He’s sticking with his thesis that gold is the best hedge against inflation and currency debasement, John Reade, a partner and gold strategist at New York-based Paulson & Co., said in an e- mailed statement. 

He must be eating antacids like it was Pez.  What is also pretty bad is that he is long all sorts of gold miners which makes that portfolio even scarier. I read an article that it costs gold miners about $1200 an ounce to dig the gold out of the ground. So if gold prices drop below that price then they will go bankrupt like crazy. Many smaller gold miners are heavily leveraged (mining gold is super capital intensive) so more of that $9.5 billion could be at risk as well.

Gold Trading is a Religion?

This is a funny article that is spot-on about my feeling that gold trading is more religion than any other type of commodity.

The reaction to Gold’s crash has produced some astonishing rationalizations. The refusal to acknowledge basic trading facts leads us to recognize that Gold bugs and traders have very specific rules that they MUST follow. These social conventions look less like a debate about asset classes and more like a religious cult.

This is one that I have heard quite a bit from the gold-floggers:

6. Gold works whether the economy is good or bad: When we have a red hot economy, Gold is your hedge against inflation. When we have a bad economy, Gold is a safe harbor against collapse. It is a one way trade that never fails!

In other words it acts as a hedge against inflation and a safe harbor at the same time. It is always uncorrelated with other assets so is safe. But I think Warren Buffet said it best:

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”

That is pretty much my feeling on gold. You dig it up and move it from hole to hole and have people guard it. All you can make with it are semiconductors (in which you need like a tiny amount) and jewelry. If people aren't buying jewelry then its only value is as a shiny block of metal that people want for some reason or another. 

I like the idea of wedding season in India being a driver of gold prices to come back from here. Oh look gold took a sickening nosedive now I can buy even more garish gold bracelets for my goofy daughter. Now I can cover her entire body in gold like an armored knight made of gold! I'm sure Indians are rushing out to do that and gold will be back at $1800 again.

Windows 8 Crashes PC Market

Well it seems that Windows 8 is actually slowing the industry instead of doing anything positive.

Shipments of PCs in the first quarter fell by 13.9% from the same quarter in 2012. The forecast decline had been 7.7%, according to International Data Corp.'s Worldwide Quarterly PC Tracker. That makes the worst quarter ever tracked by IDC, which started issuing the reports in 1994.

Mini Notebooks saw the biggest decline on the low-end, but the whole market was affected by what IDC calls "weak reception for Windows 8," Microsoft's (MSFT) answer to the rise of the tablet. The operating system that incorporates elements of tablet OS's "not only failed to provide a positive boost to the PC market, but appears to have slowed the market," said IDC's Bob O'Donnell, in a statement. He said Windows 8 is just too radical a departure from what consumers have come to expect from Windows, and too expensive. The OS has "made PCs a less attractive alternative to dedicated tablets and other competitive devices."

The thinking is that there is a needlessly steep learning curve with Windows 8 so people just buy a tablet instead. I mean if you have to learn something you might as well do it on a totally different device. I think Windows 8 will be corrosive acid that eats on Microsoft for years. I'm sure Windows 9 will be great but many people might never look back once they leave.

2017: The End of Microsoft?!?

Well it seems that Gartner Microsoft is going to be seriously hurting by 2017 if they keep losing market share to Android and iOS.

According to Gartner, worldwide shipments of smartphones and tablets may reach 1.9 billion units and 197 million units, respectively in 2013. Further, by 2017 smartphone units may touch 2.12 billion, with tablet units going up to 467 million. 

Further, Gartner predicts that traditional PC shipments will continue to decline. Shipments may fall 7.6% in 2013 to 315 million units, down from 341 million in 2012. By 2017, it may go down further to 271 million. The rise in popularity of Android-based smart devices is expected to further aggravate the decline. By 2017, Gartner expects tablets and smartphones may outperform traditional PCs.  

In other words Android and iOS based tablets and smartphones will have a huge install base by 2017 while traditional PC sales will go from 341 million to 271 million in a few years. The only problem I have with Gartner is that it is still difficult to do actual work with a tablet or smartphone. Once people get used to docking their tablet and then working with a bunch of work related apps then Microsoft will be hurting. I can see a future where certain industries have every major piece of their business software hosted outside of their company and accessible via any browser on any device.

What is worse is that ChromeOS might really threaten Microsoft from a price point of view as well. Cheap Chromebooks will eat into their already shrinking install base. I can see a company facing an upgrade cycle perhaps going to a Chromebook or a Chromebox if the majority of their programs are hosted. I mean by 2017 that company might just go all tablets with docking stations or Chromebooks to save money and make things more mobile.

I still think Windows 8 was a terrible blunder at a time when a single mistake like that lets your rivals steam right past you. Gone are the days where you can lay an egg like Windows Vista and still hold the top spot until you can get Windows 7 out there. 

The Surface looks like an also-ran and Windows 8 in general seems reviled by many. Also the Windows Phone offerings looks like something you will walk past in order to pick up a Samsung product. There is too much creative destruction in tech nowadays (and think how bad it will be in 2017) to make many mistakes in execution. 

Fisker Circles the Drain as they Lay off 75% of Their Workforce

Well here comes the next Solyndra.

The government-backed electric car company Fisker Automotive laid off about 160 workers Friday, or roughly 75 percent of the automaker's staff, as it has struggled to find financial backing that would allow it to continue building its high concept clean cars. 

The layoff announcement came as the innovative start up faces a looming repayment on a loan from the U.S. Department of Energy, and as reports have swirled that it could be preparing to file for bankruptcy. As with the failed solar firm Solyndra, the green car company was once an early pick by the Obama Administration to be part of America's clean energy future. The Obama Energy Department had approved Fisker for a government loan up to $529 million. 

Wow $529 million loan that they have to pay back soonish? I guess there is no way that they can go to the Energy Department and ask for a workout on the loan so they can continue. Oh well, this is yet another case of  the government making bad investments when it comes to green energy. 

If the US government was smart they would take some of this wasted money and start building natural gas power plants and lease them to electric utilities. That would get coal plants off the books and provide cleanish power for thousands of people.

Uh Oh Rich People. Huge Document Dump Reveals How You Folks Hide Your Money

Wow now this is some investigative journalism all right.

But here are some other numbers that explain the challenge of tackling the massive leak of confidential financial data: Somebody gave the consortium a flash drive with about 260 gigabytes of data — 160 times larger than the 2010 WikiLeaks diplomatic cable dump. The drive included 2.5 million files containing 30 years' worth of records of 120,000 offshore companies and trusts and their connection to individuals and firms in more than 170 countries and territories. It took 86 journalists from 46 countries and 38 media partners to sift through the records and try to make sense of what the ICIJ calls "the biggest stockpile of inside information about the offshore system ever obtained by a media organization."

Wow, 160 GBs of data containing 2.5 million files of 30 years worth of records. Wow now that is one huge data dump. What is interesting is the amount of money people are hiding in these offshore companies and trusts:

How much money are we talking about? The ICIJ points to a June 2012 study by former McKinsey & Co. chief economist James S. Henry that estimated the total private financial wealth stashed in offshore havens at between $21 trillion and $32 trillion — an amount, the ICIJ notes, "roughly equivalent to the size of the U.S. and Japanese economies combined."

Wow $21 to $31 trillion in tax free wealth just sitting in trusts and bank accounts in offshore tax havens? The greedy eyes of millions of regulators and governments just grew quite large at the idea of getting some of the tax money from that hoard. There are 4000 US Individuals on that list. I would love to see how many of them are billionaire politicians that pound the table about higher taxes while they stash their money in these tax havens.

Gate to Hell Found in Turkey

Well it seems that the gateway to the underworld has been discovered in the ruins of
Hierapolis. Here is a digital reconstruction of the site.

Well Fallon is In and Leno is Out at Late Night

The clueless grandees at NBC have finally announced the move.

"We are purposefully making this change when Jay is No. 1, just as Jay replaced Johnny Carson when he was No. 1," Steve Burke, chief executive officer of NBCUniversal, said in a statement. "Jimmy Fallon is a unique talent and this is his time. I'm thrilled he will become the sixth host of The Tonight Show at exactly the right moment, in conjunction with our coverage of next year's Winter Olympic Games from Sochi, Russia."

Then when Fallon is 2nd they will freak out and do something stupid instead of ride things out until Letterman retires. My money is on Fallon being kicked off Tonight Show as fearful executives try to get back into 1st by tinkering with the formula. Fox would then start a show with Fallon and they will then jump NBC.