Thursday Thoughts – Poverty in America


A black-and-white photograph of a family in a car. The mother is laying down in the front looking up despondently. Two children are crouched in the back. A boy looks out from under pieces of furniture looking directly into the camera from the shadows. Let’s talk about poverty.  

It’s spreading and it’s capable of undermining the entire economy and it’s about to explode when millions of people who are already on the edge of poverty have to start paying their student loans again.  It’s not the loan payments themselves that are the problem but that the pause on payments has put off those borrowers having to deal with the full force of the damage inflation has done to their spending power in the past two years.  

How Much Student Loan Debt is Too Much

Student debt is a huge burden for Millions of Americans who pursued higher education in hopes of improving their lives and careers.  According to the Federal Reserve Bank of New York, Americans owed more than $1.75 TRILLION in student loans at the end of last year, making it the second-largest source of household debt after mortgages.  That’s an average of $28,950 per borrower, which is more than enough to buy a new car or make a down payment on a house.

Unlike cars or houses, student loans are extremely difficult to get out of.  Most Borrowers cannot discharge their student loans, even in bankruptcy, and many have struggled to keep up with their monthly payments, especially during the pandemic.  According to the National Center for Education Statistics, 11% of Borrowers who entered repayment in 2015 had defaulted on their loans within three years.  Defaulting can have serious consequences, such as damaging credit scores, losing eligibility for federal benefits or programs, and facing wage garnishment or seizure of tax refunds.

Cartoons: A (Not So) Humorous Look at Student Loans - BlogStudent debt also has broader implications for the economy and society.  It limits the choices and opportunities of Borrowers who have to delay or forego major life decisions such as starting a family, buying a home, saving for retirement, or starting a business.  It also exacerbates inequality and injustice by disproportionately affecting low-income students and students of color who may have less access to financial aid or family support.  And it undermines the value and quality of higher education by forcing students to choose between affordability and excellence.

Student debt is not just a personal problem but a national crisis that requires urgent action.

Bing Says:  

The status of the student loan battle between Biden and the GOP is uncertain and contentious. President Biden announced a plan last year to forgive $400 billion in student loan debt for more than 40 million Americans who were affected by the pandemic12He said he had the authority to do so under the Higher Education Act of 1965, which gives him discretion over federal student loans3.

However, his plan faced immediate opposition and legal challenges from Republican lawmakers and state officials who argued that he was overstepping his constitutional powers and that he needed congressional approval to cancel such a large amount of debt45They also claimed that his plan was unfair to taxpayers, borrowers who paid off their loans, and students who chose cheaper or alternative education options65.

The Supreme Court agreed to hear two cases challenging Biden’s plan: one filed by six Republican-led states4, and another filed by a group of Republican senators led by Ted Cruz6The oral arguments took place on Tuesday, February 28th, 2023, and the court is expected to issue its ruling by June63.

The outcome of these cases could have a significant impact on millions of borrowers who are hoping for debt relief, as well as on Biden’s political agenda and legacy. Some analysts believe that Justice Amy Coney Barrett could be the swing vote on the court, as she has shown some sympathy for borrowers in previous cases involving student loans1Others say that the court could avoid ruling on the merits of Biden’s plan and instead focus on procedural issues such as standing or mootness3.

Poverty is a multifaceted phenomenon that goes beyond a lack of income.  The World Bank defines poverty as “pronounced deprivation in well-being,” which encompasses not only low income but also limited access to Education, Healthcare, Housing, and Social Participation (World Bank, 2022). In the US, poverty is typically measured by the Federal Poverty Line, which is based on household income and family size. According to the US Census Bureau, the poverty line for a family of four in 2022 was $27,750 – though how you are supposed to live with a family on $27,750 I can’t possibly imagine…

Cost of Living in Iowa 2022 | Common Good Iowa

Despite being one of the wealthiest nations in the World, poverty remains a pressing issue in the US.  According to the latest data from the US Census Bureau, 9.2% of the population, or 30.1 Million people lived in poverty in 2020.  The poverty rate varies significantly by race and ethnicity, with Black and Hispanic individuals experiencing higher poverty rates than White and Asian.  In 2020, the Poverty Rate was 18.8% for Black individuals, 15.3% for Hispanic individuals, 6.6% for White individuals, and 6.7% for Asian individuals per the Census that year.

Children in PovertyPoverty has a profound impact on individuals, families, and communities.  Individuals living in poverty are more likely to experience Food Insecurity, Housing Instability, and limited access to Healthcare, Education, and Employment Opportunities.  Children living in poverty are more likely to have Developmental Delays, Lower Academic Achievement, and higher rates of Chronic Health Conditions.  Poverty also has intergenerational effects, as children who grow up in poverty are more likely to live in poverty as adults.

Moreover, poverty is linked to Social Exclusion and Marginalization, as individuals living in poverty often face Stigma and Discrimination.  They may also have limited social networks and community resources, which can exacerbate their Isolation and Vulnerability.

The causes of poverty are complex and multifaceted, but they often stem from Systemic Inequalities and Structural Barriers, such as Discrimination, Lack of Access to Quality Education and Healthcare, Low Wages, and Inadequate Social Safety Nets.  Poverty also intersects with other social issues, such as Race, Gender, and Immigration status, which can further compound its effects.

Addressing poverty requires a comprehensive and multi-dimensional approach that tackles its root causes and provides support to individuals and communities. This can include policies that increase access to Education and Training, improve the affordability and availability of Housing and Healthcare, and provide a robust Social Safety Net. It also requires addressing Systemic Inequalities and dismantling barriers to Opportunity, such as Discrimination and Prejudice.

Poverty is a pervasive issue in the US that affects individuals, families, and communities across multiple dimensions. Addressing poverty requires a holistic approach that tackles its root causes and provides support to those in need. By investing in policies and programs that prioritize Equity and Opportunity, we can create a more just and inclusive Society for all.

I asked Bing to summarize the NYTimes article on Poverty, by America – you should all read it in full and please, get others to read it as well.  

Poverty, by America, is a new book by Matthew Desmond, the author of the Pulitzer Prize-winning Evicted12The book is a study of how the wealthy harm the poor in the United States, both intentionally and unintentionally12. The NYTimes praises Desmond’s book as a “powerful indictment” of American capitalism and inequality, and highlights some of his findings and arguments, such as:

The article also compares Desmond’s book to other works on poverty, such as Nickel and Dimed by Barbara Ehrenreich and The New Jim Crow by Michelle Alexander, and argues that Desmond’s book is more comprehensive and systemic in its analysis3The article concludes by calling Desmond’s book a “must-read” for anyone who cares about social justice and democracy3.

My comment on this article is that it is an informative and persuasive review that summarizes the main points of Desmond’s book and provides some context and critique. It also raises some important questions about the causes and consequences of poverty in America, such as:

    • Why does poverty persist in such a wealthy country?
    • What are the moral implications of exploiting or ignoring the poor?
    • How can we create more equitable and humane policies for all?

With 10% of the people in our country already living below the poverty line, the Government is cutting SNAP Benefits and reinstating Student Loan Payments at the worst possible time.  As much as we like to ignore them, the 30M Americans below the poverty line still spend $360Bn a year of their own money and another $360Bn in Government assistance that they receive goes right back into the economy with a 3x multiplier and, IN FACT, ends up right back in the hands of the very people who complain about the taxes used to support them.  

There’s another 60M people with student loan debt who aren’t considered poor because they can still move back in with their parents but let’s see what happens when we cut their disposable income back below zero.   

That’s the Social Experiment we’re about to engage in!  


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Good Morning.

Good Morning
here is a fun fact from the Tractor Supply report:

– they’re raising chickens. 1 in 4 of our customers raise chickens. We are one of the only retailers that sell live birds annually.

Can you look at SIVB. Is this an opportunity?

Really appreciate you showing us how this form of AI works and the value of it. Really helps to see it in action. The monthly bar journal in my State contained an article of how it will revolutionaize the legal field. A few trial attorneys used it for a variety of matters (research, wills, analysis of legal principles, etc) and were blown away.

phil or anyone, can someone figure out why PACW is dropping 20% in one day? they have had big multi-family loans and commericial real estate loans on the books, and that has been dragging them down. but if anyone can figure out why they dropped 20% in one day, i woud really appreciate it. they don’t have any crypto assets do they?

No specific info on PACW but not a good day for bank stock – BAC; C; JPM; WFC; all down this week and today. Maybe something in Biden’s proposed budget package?

i’m guessing somewhere there is a some obscure bank regulatory body that received some even more obscure filing from PACW that says how stock owners just got screwed.

all the bank financials are down, but those connected with crypto like SBNY are down the most. Don’t know if thats the case with PACW

he first Bing Article at 10:56 seems to be using old data. The 10 year is close to 4%, NASDAQ is not at record high.

KRE lowest levels since Feb 2021 today down 4.5%,  This could spill over to the broader market

my PACW outdid that by 300%+ today.  😂 

I’m seeing tons of bank puts bought today

but someone buying 5000+ PACW April $22.50 calls for a bounce

I picked the wrong day to buy banks.

 😂  😁 

i know how you feel. i own PACW.

I went from calculating what I would make on a bounce to calculating how much in dividends I could make this year LOL, I picked up TFC this morning and it flushed lower and hasn’t stopped.

phil, bofa down 5.5%? i don’t want to be alarmist, but this is imminent crash type stock behavior.

that sounds eminently logical. but i think it follows that the dose of reality is going to spread far and wide.

whole thing is just getting weird. dollar is actually having a reversal day!

Would you be able to recommend a new hedge, since I feel my portfolio isn’t hedged enough and to my eye there aren’t any in the STP that look good for a new trade?

Last edited 14 days ago by brucethenet

INTC is green , so is MO

SPWR holding up like a champ!

Phil – re your proposed book, I submitted a 2nd comment re additional quotes and factors. I discussed Adam Smith’s 1st Book, “Theory of Moral Sentiments”, which laid the groundwork for his “Wealth of Nations”. Did you see it? DanB