Hi, I’m Dr. Parik Patel, BA, CFA, ACCA, Esq. If you don’t know me already, I’m a Chartered FinMeme Analyst (CFA) with a particular expertise in #stonk valuation (pro-tip: just multiply by two).
I’ve been told that I have a particularly special insight into the world of finance and memes, so I decided to set up this newsletter to share my thoughts on the latest news, memes, and everything in between! Expect a newsletter at least twice a month, and follow me on Twitter for more updates and daily musings.
Also, I have new Dr. Parik stickers available in the Bullish Studio Store — get yours here while supplies last!
For this week’s newsletter, I’m going to highlight some major news and events from the past week and explain what makes them noteworthy in the eyes of Dr. P. This week’s media milestones include some troubling news about student loan relief, the US debt ceiling being increased, and Elon Musk being named TIME’s Person of the Year.
The COVID-19 pandemic brought with it many stimulus and relief measures, from $600 stimmy checks, to a moratorium on evictions. But nothing has been more politically polarizing than student loan relief. The idea was that if you’ve borrowed money to pay for college, you can have several months of relief from repayments to navigate the uncertainties of the job market in the midst of the pandemic. But that ends now.
In a major blow to borrowers, the Biden administration has recently confirmed that it won’t extend student loan relief again, and repayments must restart from February 1, 2022. The moratorium on loans benefitted 41 million borrowers, two-thirds of whom reported in a spring survey that it would be difficult for them to afford payments if they resumed the following month.
Taking money from consumers is never going to sit well, but with the economy largely back open and the unemployment rate down to just 4.2% in November 2021, the administration is asking themselves the question, “If not now, when?” However, progressive members of Congress and other activist groups are lobbying the administration to extend the moratorium once more — or even cancel loans altogether. They argue that nearly 90% of borrowers feel unprepared to resume payments and that 9 million borrowers who are already in default will feel the pinch further.
So we’ve gathered that borrowers will take the hit, but who benefits from this move? Student loan refinancing companies from MEFA to SoFi will likely see an uptick in demand as some consumers (likely those with better credit histories) may experience large savings from potentially lower rates.
Taking out an Amex to pay your Mastercard credit card bill doesn’t seem like a great idea, but that’s kind of what the Treasury has done to avoid defaulting on its debt. As the backstop of the global financial system, the US has never defaulted on its debt. And it wasn’t about to start now.
On late Tuesday afternoon, the Senate approved a raise to the debt ceiling that would allow the US to pay its debt obligations in a narrow 50-49 party-line vote. The House duly followed suit on Wednesday, passing the bill by a 221-209 margin before sending it to Biden’s desk just a day before it was estimated that the US could fail to pay its obligations.
This is like taking out an Amex to pay my Mastercard credit card bill twitter.com/POTUS/status/1…
— Dr. Parik Patel, BA, CFA, ACCA Esq. 💸 (@ParikPatelCFA)
Dec 12, 2021
But why is this such a big deal? What would the consequences be if the US defaulted on its debt? In a word… catastrophe.
US Treasury Bills are the backstop of the global financial system, and the dollar is the world’s reserve currency. According to analysts, the “best case scenario” for a debt default would be recession, with Moody’s estimating that the unemployment rate would more than double to 9% and stock prices would fall by at least a third.
And it doesn’t end there. Once the “risk-free rate” is found to be no longer dependable, the dollar’s place as the global reserve currency could be challenged and treasuries would likely sell off, leading to a spike in global interest rates as the entire financial system adjusts.
“Catastrophic” probably isn’t an exaggeration. Suddenly, taking out a new credit card doesn’t seem so bad… for now.
Elon Musk — Meme King, Space Lord, and Emperor of Mars — has been named TIME’s Person of the Year for 2021, a tradition going back nearly a century with the first award being presented in just 1927 to Charles Lindbergh, an American aviator who made the first nonstop flight from NYC to Paris. Other alumni range from the more controversial, such as Hitler (1938) and Stalin (1939), to more benevolent figures like Obama (2008 and 2012) and Greta Thunberg (2019).
Fortune favors the bold, and TIME describes Elon in its op-ed as:
"The man who aspires to save our planet and get us a new one to inhabit: clown, genius, edgelord, visionary, industrialist, showman, cad; a madcap hybrid of Thomas Edison, P.T. Barnum, Andrew Carnegie and Watchmen’s Doctor Manhattan, the brooding, blue-skinned man-god who invents electric cars and moves to Mars."
With a net-worth of ~$300 Billion, Elon is arguably the richest person to ever walk the earth according to Forbes, surpassing Amazon founder Jeff Bezos in September and not looking back since. Elon is no ordinary billionaire. He’s helped to redefine payments with PayPal, he’s practically birthed the nascent EV industry with Tesla, and he’s revolutionized space travel with SpaceX. And yet he still finds time to hit back at Senators on Twitter and post edgy memes while sitting on the john.
Love him or hate him, there has never been and will likely never be someone quite like Elon. Daring. Creative. Different. And that’s exactly why he’s TIME’s Person of the Year for 2021. Though, if I’m being honest, they should certainly consider Dr. Parik for next year’s pick…
~ Dr. PP out
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