THE BIDEN ADMINISTRATION, facing a major election debacle in November, is expected to announce another extension of student loan interest payments, which will benefit about 40 million debtors. That’s a lot of voters.
THE MORATORIUM WAS SUPPOSED TO END on May 1, but surging gasoline and food prices have convinced Biden officials that they should extend it until Aug. 1 (still another extension, as the Nov. 8 elections approach, is likely in late July).
WITH INFLATION AND AN INCREASINGLY HAWKISH Federal Reserve likely to cool economic growth by year-end, the Biden administration wants to keep stimulus flowing on everything from student debt payment relief to another huge Social Security cost of living increase, which will be announced just before the election.
BIDEN’S GRADUAL APPROACH on student loans has angered progressives, most of whom favor debt forgiveness of perhaps $50,000 in loans. Biden has been opposed to any kind of blanket debt relief, but this will be his fourth extension. President Trump extended the moratorium twice.
THIS LATEST EXTENSION, which could be announced today, means that borrowers collectively will save about $5 billion each month in interest payments that do not accrue on their loans, the Biden Administration estimates.
OUR BOTTOM LINE: While the growth of Washington spending is slowing, it’s still robust — states and individuals are flush with cash. A recession is possible in 2023, but it doesn’t look imminent this year; a student loan payment moratorium will help keep consumers afloat.
MEANWHILE, THE SANCTIONS CLAMPDOWN ON RUSSIA is intensifying this week in the wake of shocking reports of torture and murder of Ukrainian civilians. New sanctions have targeted Russia’s ability to make debt payments; a default is increasingly likely by early May, the New York Times concludes in a report this morning.
DESPITE ANXIETY over surging food and fuel prices, Western leaders are under pressure from voters to do more to punish Vladimir Putin. More arms shipments to Ukraine are certain, as are curbs on purchases of Russian coal.
THE BIGGEST NATO CONTROVERSY is over Russian natural gas; Germany doesn’t want to accept immediate curbs on imports. “We are pursuing a strategy that will make us independent of Russian gas, coal and oil, but just not right away,” a top German official said yesterday. That means Germany will continue to send about $220 million a day to Russia for natural gas, which will help finance Putin’s murderous war.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.