Monthly Archives: June 2013

America’s Student Loan Debt Crisis

30 Sunday Jun 2013

Posted by in Economy and Finance, United States

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debt quadrupled[1]Student Loan Debt 2003-2013
Source: http://www.motherjones.com

 

On 1 July 2013, unless they make a deal, the US Congress will pass legislation to double interest rates from 3.4 percent to 6.8 percent on federal subsidized Stafford student loans. (See HR 1330 – The Student Loan Fairness Act of 2013.) For sixty percent of students who depend on these loans to fund their college education, this increase matters. More so for working class families with net worth of under $8,500. These families account for over half of all student loan debt.

I find it difficult to understand our government’s reasoning for wanting to place more burden on the working class. We already face a student loan debt crisis in the United States. Our outstanding student debt has already soared beyond one trillion dollars. That’s more than the nation’s combined auto and credit card debt.

Due to runaway college tuition, an increase of over fifty percent since 1999, students and their families have taken on crippling debt loads. My son is among the 37.1 million borrowers with outstanding student loans. Almost seven million of them are delinquent on their payments, totaling $113 billion.

I know the value of a college education. Our children who would like to pursue higher education should have a chance to do so. It’s not only an investment in their individual development and professional growth, but also beneficial to our communities, industries, and nation.

But our world was transformed by the global financial crisis of 2008. The job market shrunk. Competition for job openings is fierce. Our investment in a college education no longer guarantees a better and higher paying career path. In a time of austerity, maintaining loan payments becomes a struggle when we are faced with unemployment and under-employment.

Consider student loan debt statistics for the first Quarter of 2012. The average student loan balance was $24,301. Twenty five percent of borrowers owed more than $28,000. One percent, or 167,000 people, were crushed with balances exceeding $200,000. While 67 percent of borrowers were up to 39 years of age, 33 percent, or 12.5 million people, were forty years and older.

Borrowers who have Sallie Mae private student loans face even greater challenges with higher interest rates than Stafford loans. America’s largest private student loan lender owns about fifteen percent, or $162.5 billion, of our total student loan debt. This corporation does not care about students trapped in crippling debt. Only their profit counts.

Beginning our adult life with student loan debt sabotages our future. When the debt becomes burdensome, it hampers our potential to grow. Opportunities are lost. We put our lives on hold. The vision of our future is blurred or dismal. (Join young people working for affordable education.)

Under current market conditions, is a college education still worth it? If unchecked, can our student loan debt crisis crash our economy?

 

Protests in Brazil: The people have awakened

23 Sunday Jun 2013

Posted by in Brazil, Economy and Finance, Social Injustice

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Protests in Brazil - Fortaleza - Ceara - 20 June 2013Protests in Brazil – Fortaleza – Ceará – 20 June 2013
Source: tribunadonorte.com.br

 

This past week, the magnitude of the protests across Brazil took me by surprise. On June 6th, I had paid little attention to news about protests in São Paulo against a 20-cent rise in bus and train fares. That happened often in Fortaleza and other Brazilian cities during the sixteen years me and my sons lived in Brazil, and in subsequent years.

My attention was riveted on events taking place in Fortaleza. On Facebook, I followed plans for a mass demonstration against violence. Already a grave concern when we lived in Fortaleza. On June 13th, over three thousand protestors crammed major streets, displaying red-painted hands. Their slogan: Fortaleza Apavorada: Basta! (Fortaleza Terrified: Enough!)

In the meantime, over 1,800 miles down south in São Paulo, the number of demonstrators in the streets had grown from 500 to 5,000. Vandals created havoc among peaceful demonstrations, forcing the police to take action. Their indiscriminate use of pepper-spray and rubber bullets on peaceful demonstrators drove more people to the streets.

By June 17th, years of pent up frustrations were unleashed. Thousands more swarmed the streets in São Paulo and in other cities across Brazil: Rio de Janeiro, Brasília, Belo Horizonte, Porto Alegre, Vitória, Curitiba, Salvador, Maceió, Fortaleza, Belém, and others. (See Veja for up-to-date Brazilian news on the protests.)

Although the Governor of São Paulo and the Mayor of the capital rescinded the 20-cent increase in bus and train fares on June 19th, the people continued to fill the streets. By evening the next day, over one million demonstrators clamored in eighty cities across the nation.

I struggled to understand this sudden and sustained revolt. Over two decades now, Brazilians have been bearing up with all kinds of abuses and depravations caused by corrupt politicians, cronyism, and impunity. They found ways – o jeitinho brasileiro, they called it – of working around and coping with corruption, inflation, high taxes, inadequate public health and education, poor infrastructure, violence, and more.

Why now?

The economic boom over the part ten years lifted thousands out of poverty and expanded the middle-class. More people working. More people consuming goods and services. More money in the pockets of corrupt officials and the elite. Greater stress on public health services. Greater demand for a decent education. Greater demand for more and improved infrastructure.

With billions being spent – and pocketed – on constructing stadiums and accommodations for hosting the FIFA World Cup 2014 and the Olympics 2016, I suppose something had to give. For an indignant population suffering from abuse and depravations, the 20-cent increase in bus and train fares was the last straw. Basta!

You, the Brazilian people, have awakened. President Dilma Rousseff has heard your demands for change. She is ready to receive leaders of peaceful demonstrations. Are you prepared for the task ahead?

The world is watching. I’m a Brazilian of the heart. I’m rooting for you.

Sou brasileira de coração. Estou torcendo por você.

A Father’s Enduring Legacy

16 Sunday Jun 2013

Posted by in About Me, Brazil, Family Life, Guyana, Relationships, United States

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Happy Father's DaySource: forum.xcitefun.net

 

Last Wednesday, the father of a dear friend in Brazil would have celebrated his ninetieth birthday. He died twenty-three years ago, leaving a void in my friend’s life. Maria described her father as a quiet, simple, and observant person who did everything he could for his children. His greatest legacy to her was his kindness towards others less fortunate.

Once, Maria recounted, on the street where they lived, the father of a poor family died. Knowing that the family of the deceased could not afford the burial costs, Maria’s father stopped by at the family’s residence and sent her in to call his widow. He told the woman to bury her husband and send the bill to him for payment.

For Maria this was such a great lesson that, since that incidence, she cannot be indifferent to the suffering of others.

After reading Maria’s story about her father, I thought about my own father’s legacy. In Guyana, Land of Six Peoples, my father’s close friends included blacks, East Indians, Chinese, Portuguese, and people of mixed race like he was. They frequented our home for barbecues on Saturday nights. When, as a British colony, we were occupied by white British soldiers, he even entertained my aunt’s British boyfriends. (For a number of years, my mother’s younger sister lived with us.)

Through my father’s example, I learned to look beyond the differences of our diverse peoples, discerning what we shared in common as individuals.

Interestingly, for both me and Maria, the way our fathers related with people outside of the home determined the way we relate with the world.

What is your father’s enduring legacy? As a father, what will be your enduring legacy to your sons and daughters when you are gone?

 

Our Credit Score: A Number that Defines & Divides Us

09 Sunday Jun 2013

Posted by in Economy and Finance, United States

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Components of Your FICO Credit ScoreComponents of Our FICO Credit Score
Source: www/consumerismcommentary.com

 

Numbers are an integral part of our lives. From an early age, they define who we are as individuals: age, height, and weight. We occupy space and status in the world, evident by our residential street number and zip code.

The older we get the more numbers we accumulate: social security, bank accounts, credit cards, driver’s license, and passport. These numbers define our personhood and achievements.

Then there is our credit score.

Based mainly on our payment and credit use history – see above chart – the credit score indicates our risk as borrowers. On a scale of 300 to 850, the higher our score, preferably in the 700s, the more attractive we become to money lenders. There’s no hassle to get a loan to buy our dream car, that house in the suburbs perfect for our kids, or enroll for a Masters in Business Administration.

The advantages don’t end there. We’re rewarded with lower interest rates on our auto and student loans and mortgage. In other words, the higher our credit score, the less we pay over our lifetime for goods and services.

My sons and I first learned about the credit score on our first bank visit to open a checking account and apply for an American credit card. At that time, I had an international credit card account issued and payable in Brazil. My excellent payment and credit history had no value in the United States.

My credit score was zero.

Five years later, I began receiving credit card offers in the mail. I accepted an offer from Capital One with a $250.00 credit limit. Two years later, when my credit score hit the 600s, pre-screened credit card offers from major American banks flooded my mailbox.

I have observed that increased debt raised our credit scores. Additional credit cards with higher credit limits also upped our scores. The more we spend and borrow, the greater our value as individuals.

The American credit score system perpetuates inequality.

Low-income, hardworking, honest people with limited access to credit are defined by low credit scores. The owners of Walmart have amassed a fortune providing them with low-cost goods produced by low-income workers across the globe.

High-income middle class workers, who pay their debts, are defined by their top value credit scores. Our financial institutions have become power brokers providing them with credit and other financial products.

The propagators of the credit score system are not defined by credit scores. Their wealth allows them to pay cash for high value goods and services. Immune to the control and demands of the consumer numbers system, they created massive, criminal debt, bringing down the world economy in 2008. Their impunity allowed them to pass on their debt to you and me.

I am a mere consumer number. Do you know your number?

A Faithful Friend

02 Sunday Jun 2013

Posted by in Brazil, Family Life, Relationships

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A Faithful FriendSource: amigafieltotal.blogspot.com

During my second year at Ceará Importers, Cristina* joined the Personnel Department. She shared an office with me and the assistant accountant.

A single woman in her twenties, Cristina was a devout Roman Catholic and active member in her parish Church. Soft-spoken, she measured her words when speaking with others. Attentive and diligent in the execution of her work, she soon won the respect of all staff members.

Cristina and I became friends. My sons and I first went to her home for a nephew’s birthday party. Located in a working-class neighborhood on the periphery of Fortaleza, her family’s three-story house was long and narrow. During a tour of the house, she pointed out the sub-divisions for her, her parents, and four married siblings with their children. The communal kitchen and dining room were located on the ground floor.

The most-recently married brother had built his house in the extensive backyard. When she got married, she told me, her family planned to add another flat above the bungalow.

I marveled at the way this extended working-class Brazilian family had pooled their resources to support one another.

At Ceará Importers, on the assistant accountant’s resignation, Cristina referred a friend from her Church group. With the necessary qualifications, he got the position. When the Personnel Department needed another assistant to handle the demands of a growing workforce, Cristina found a neighbor, an older woman, with the required experience.

A few years later, Cristina’s best friend Lucinda* became a new addition to the Accounts Department.

Then our lives changed in 1999. After five years of expansion and success, Ceará Importers suffered a severe blow from Brazil’s Central Bank. The five-year-long fixed parity of the US dollar and Brazil real had come to an end. At that time, the company had six retail stores in Fortaleza and franchise stores in major cities in Northeast Brazil.

Cristina’s position placed her in the front line of the downsizing that followed. I recall the day the first batch of retail store workers gathered in the Head Office compound to receive their final paychecks and other monies due by law.

Months later when Lucinda’s name appeared among those on the cutting list, Cristina stepped in to save her best friend. Lucinda’s husband had recently lost his job, leaving her as the sole-provider for him and their eleven-month-old infant. Cristina asked her boss to instead reduce her own salary. The personnel manager spared Lucinda for a couple more months, by which time her husband had found another job.

Cristina left the company some time after my departure. Holding key positions, the other two friends she had brought to the company survived the downsizing.

A faithful friend is beyond price,
no sum can balance his worth.
A faithful friend is a life-saving remedy,
such as he who fears God finds;
For he who fears God behaves accordingly,
and his friend will be like himself.
 
Ecclesiasticus/Sirach 6:14-17

* Fictitious Name