WSJ Article on Obama's Moves to Make Student Loan Default Easier

Last edited Sat Jun 20, 2015, 12:19 PM - Edit history (2)

I thought this article interesting, but its title tells little about the content. so I made up my own subject heading. It is not a new article, and was written back in March of this year. If anyone has knowledge of what's happened since Obama brought up the possibilities, please post.

Welcome to Ginger and Pickles University
Obama wants to make student-loan defaults easier. Maybe he should consult with Beatrix Potter first.

Rising student-loan default rates are back in the news. As President Obama signed a “Student Aid Bill of Rights” initiative Tuesday, he said his administration will study the idea of extending bankruptcy options for all student-loan borrowers.

How did we get here, and what can we expect to come? Let’s ask Beatrix Potter. If you seek a lesson in credit bubbles, you need look no further than “The Tale of Ginger and Pickles,” published in 1909.

Ginger is a tomcat and Pickles is a terrier. Together they run a small village shop, generous enough to operate on a peculiar business model: They are willing to sell things on credit—unlimited credit. Potter explains this to her youthful reader thus: “when a customer buys a bar of soap, instead of the customer pulling out a purse and paying for it—she says she will pay another time. And Pickles makes a low bow and says, ‘With pleasure, madam,’ and it is written down in a book.”

Ginger and Pickles have lots of customers. They have many more customers than the other village shop, run by Tabitha Twitchit (who always expected actual payment). And so, written down in their account book, Ginger and Pickles have a lot of money owed to them. But no actual money is coming in.

http://www.wsj.com/articles/joshua-p-hochschild-welcome-to-ginger-and-pickles-university-1426113676



Cher