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    ‘They’ve lost my trust’: consumers shun companies as bosses kowtow to Trump

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    In late January, Lauren Bedson did what many would likely find unthinkable: she cancelled her Amazon Prime membership. The catalyst was Donald Trump’s inauguration. Many more Americans are planning to make similar decisions this Friday.Bedson made her move after seeing photos of Jeff Bezos, the Amazon founder, sitting with other tech moguls and billionaires, including Elon Musk, Mark Zuckerberg and Google’s Sundar Pichai, just rows behind Trump at his inauguration.“I just couldn’t stand to see them so cowardly,” Bedson, of Camas, Washington, told the Guardian. “I lived in Seattle for over a decade. I was a fan of Amazon for a long time, I think they have a good product. But I’m just so disgusted. I don’t want to give these billionaire oligarchs any more of my money.”It’s a sentiment that many Americans have been feeling since Trump entered the White House. Companies and business leaders who were once passive or vocally critical of Trump are now trying to cozy up to him, leading consumers to question the values of the brands they used to trust. A recent Harris poll found that a quarter of American consumers have stopped shopping at their favorite stores because of shifting political stances.Many are being inspired by calls to boycott coming from social media. One boycott has gone viral over the last few weeks: a “blackout” of companies that dropped some of their diversity, equity and inclusion (DEI) goals, including Target, Amazon and Walmart, is planned for 28 February with protesters planning to halt all spending at these corporations for the day.View image in fullscreenBut people are also making the decision to boycott at their kitchen tables, trying to figure out how to resist Trump, and perhaps corporate capitalism at large, within their own communities.The Guardian asked readers how their shopping habits have changed over the last few months, as the political climate started to shift after Trump’s win. Hundreds from across the country said that they have stopped shopping at stores such as Walmart and Target that publicly announced the end of DEI goals. Dozens like Bedson had cancelled long held Prime accounts. Others have shut down their Facebook and Instagram accounts in protest of Meta.“I’m just trying to do little things that make me feel a little bit empowered, to stake my claim against what’s happening and how companies are acting in ways that are opposed to my values,” said Kim Wohlenhaus, of St Louis, Missouri, who cancelled her Prime membership, deleted her Meta accounts and has stopped shopping at Target. “It feels good to be able to do something.”Erica Bradley, of Reno, Nevada, said she stopped shopping at Target because of their changing DEI policies.“I don’t plan on going there ever again, just because I feel like they’ve shown that they’re not really committed to these things,” Bradley said. “They’ve lost my trust.”View image in fullscreenFor many consumers, the shift away from the big companies has revealed how much they have come to rely on them. As of last spring, 75% of American consumers had Amazon Prime memberships, a total of 180m Prime accounts, according to Bloomberg.Bedson said cancelling her account made her aware of a culture of consumerism in American where “in some ways, it feels like we don’t have a choice”.“Amazon is so convenient,” she said. “I think we all have become very complacent or complicit, and it’s hard to make these changes. But on the other hand, what else can we do?”It’s been a year since Bradley cancelled her Prime account, after she saw Amazon’s union busting. She recalls a transition period as she was adjusting to life without Prime, but it ultimately led her to spend less overall.“I just decided I don’t really need a lot of these things. Like I don’t need more clothes, I don’t really need more house decorations, which are things I used to spend a lot of money on,” Bradley said. “It’s not retail therapy anymore.”The Harris poll found that a third of Americans are similarly trying to “opt out” of the economy, cutting down on overall spending as the political stances of corporations have become murky.View image in fullscreen“It’s like a Whac-a-Mole now,” Wohlenhaus said. “You could really look in any direction and find something you dislike about the way corporations are caving to this administration.”Wohlenhaus said she has started to prioritize shopping at local businesses. She kept her Costco membership, since the company affirmed its DEI policies.During Joe Biden’s presidency, many of the boycotts against companies actually came from conservatives who felt corporations were caving to a “woke” mob. But boycotts didn’t amount to any serious consequences – with two exceptions. Bud Light saw a drop in sales after it sponsored a post by a transgender influencer and Target removed some of its Pride merchandise after conservative backlash.It’s unclear what the consequences of the current backlash will be. But Wohlenhaus and others voiced optimism that consumers are thinking critically about the choices they’re making at checkout.“Hopefully if thousands of other families are doing what we’re doing, I think they’ll start to feel it,” she said. “We don’t care about your products as much as we care about those values that we cherish.” More

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      UK marketplace sellers face ‘second Brexit’ hit from Trump’s US import rules

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      Many UK-based independent sellers on marketplaces such as eBay and Amazon could suffer a significant hit to US sales from planned changes to import rules under Donald Trump, with experts comparing the impact to a second Brexit.The new rules, which mean all parcels originating or made in China and being sold into the US must pay import duty – of as much as 15% on fashion items – and an additional 10% tariff, are also expected to impact bigger online clothing retailers such as Asos and Boohoo.The changes were introduced at the start of February in an attempt to protect US retailers from a surge in competition from the likes of Chinese online marketplaces Shein and Temu, but were indefinitely paused after the US customs service struggled to cope with the massive increase in parcels requiring checks last week.However, they are expected to be implemented within the coming months, potentially driving up prices for US consumers and hitting sales for online retailers.Before the change, parcels with a value of less than $800 (£635) shipped to individuals in the US were exempt from import tax and did not pass through the usual customs checks. That scheme, originally designed to help smooth online shopping, is being revoked after it emerged that the number of shipments under the “de minimis” rules had ballooned to more than 1bn, valued at $54.5bn by 2023 – most of them from China or Hong Kong via firms including Shein and Temu.“You are looking at an increase of $30 to $50 per consignment [group of parcels],” said Brad Ashton at the advisory firm RSM. “It is creating a perfect storm for online retailers putting goods into the US market. It has a lot of the hallmarks of Brexit in terms of its potential impact on small traders.“Businesses will see their margins eroded because costs will increase. We may get to a point where the changes make a UK business uncompetitive in selling to the US.”The widespread use of Chinese factories for many British brands, particularly in fashion, means businesses such as Asos and Boohoo will be drawn in, as well as many UK independent marketplace sellers.It will not just affect goods made in China and then sent from the UK, but potentially a much wider array, as any package containing even one product made in China may have to pay import tax and pass through customs checks, further increasing costs, according to experts.There is also an expectation that the de minimis rules will eventually be scrapped for all imports, no matter their origin.About $5bn worth of parcels were exported to the US from the UK under de minimis rules in 2021, according to a Congressional Research Service analysis of data from US Customs and Border Protection. About 80% of that was estimated to be related to online retail, with fashion likely to be a large proportion of it.Chris White, at the logistics company Fulfilmentcrowd, said that during the brief period when the rules were in place in early February, one-third of the parcels it shipped to the US from the UK were found to be of Chinese origin and subject to the new taxes.Fast-fashion specialists Asos and Boohoo sell about £300m of clothing a year to the US. Both are already struggling to compete with the rise of Shein and high street retailers, which have revived after the Covid pandemic. John Stevenson, a retail analyst at Peel Hunt, said Asos and Boohoo would have to “adjust prices or take a view on [the] profitability of operating in the US”.As well as the higher tax charges, customs checks required after the rule change will add as much as two days to the processing of orders, making UK retailers less competitive with US-based operators on the speed of delivery.skip past newsletter promotionafter newsletter promotionStevenson said the hit to Asos and Boohoo was “not business-critical” in the way it could be for Shein or Temu, which he believed were heavily reliant on the tax benefit, but that it would have an impact.In the short term, online sellers will probably have lower sales because of uncertainty among US shoppers over possible taxes. White said that during the period when the new rules were in place, similar parcels were loaded with different levels of duty as local customs officers made different decisions.He said a further element of the rule change might be to expose brands that were “trading on an image of being British or European” as being “made in China and not Savile Row”, potentially damaging their appeal.There would be “lots of crossed fingers and puzzled faces” over the changes in legislation, with retailers potentially opening more US warehousing or, longer term, to switch sources of supply, White added.Boohoo closed its US warehouse earlier this year, and Asos is scheduled to close its facility there in November. However, a reversal could be on the cards if the de minimis rules are confirmed. Many fast-fashion companies have already diversified their supply chains – making more in India, Bangladesh or Turkey. Trump’s tax changes could accelerate this further.Shein is reportedly incentivising Chinese suppliers to set up in Vietnam, according to a report by Bloomberg.It is not clear when the new rules might be implemented as the US tries to put the technology and workforce in place to handle the new system. Experts say it could take weeks or months.While there is a chance that Trump will change his mind, as he has done on tariffs with Canada and Mexico, no business can bet on which way the US might jump. More

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      The heartlessness of the deal: how Trump’s ‘America first’ stance sold out Ukraine

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      In Donald Trump’s world, everything has its price.There is no place for sentiment in his politics. Common values cannot secure loans for military aid. And the US president does not care who controls the blood-soaked soils of east Ukraine, so long as he can access the rare earth minerals that lie beneath.The peace Trump will negotiate is not about justice. There is no deeper moral or morality here except for who “got it done”, and Trump has signaled that he is ready to pressure Ukraine and Europe to provide concessions to entice Russia to sign on the dotted line.All that’s left for him is to hash out a price.“I’m just here to try and get peace,” Trump said in the Oval Office, where he riffs out policy daily. “I don’t care so much about anything other than I want to stop having millions of people killed.”It is difficult to put into words what an about-face this is for US support for Ukraine, which for years was built on helping the country defend itself, though not win the war.The Biden administration helped manage the symptoms of Russian aggression. Now, Trump says he’s going to provide the cure. But it is an unwelcome one: stop resisting.Since Russia’s full-scale invasion in 2022, the adage in the Oval Office had been “nothing about Ukraine without Ukraine”. Biden officials regularly said in public that Ukraine itself would decide when it was ready to negotiate.But that was before the US election. It wasn’t the issue of Ukrainian manpower or the supply of weapons that ultimately brought us to this point; it was the price of eggs in Pennsylvania. The Biden administration’s biggest betrayal of Ukraine may have been to lose the US elections, effectively surrendering Ukraine’s second front to “America first”.“We’re the thing that’s holding it back, and frankly, we’ll go as long as we have to go, because we’re not going to let the other happen,” said Trump, in what may be the only silver lining of his remarks on Monday, indicating he wouldn’t allow Ukraine to collapse completely. “But President Putin wants that peace now, and that’s good, and he didn’t want to have peace with Biden.”Some Ukrainian and Russian observers may believe the US president has a deeper plan here, perhaps to consolidate Europe and then pressure Russia as a united front while sinking the oil price. But judging by his actions in Gaza, or in the United States, there is likely to be no deeper plan.Assigning Steve Witkoff, his go-to dealmaker who negotiated the Gaza ceasefire-for-hostages deal, rather than the hawkish Gen Keith Kellogg, indicates that the process will be maximally unsentimental. Just another real estate deal.Now, much of Europe is wondering whether Trump is about to deliver them a fait accompli on their eastern flank, seeking to commit European troops with no Nato protection to Ukraine in a security agreement negotiated exclusively between Moscow and Washington.“What’s left to negotiate?” read one text message from a European official, who called it a “surrender”.In fact, that was just Trump’s opening offer.Russia has indicated it wants him to go further. In a communique, the Russian president, Vladimir Putin, said he wanted the deal to address the “origins of the conflict”, which he has previously said include Ukraine’s pro-western stance and the Nato expansions of the 2000s and 1990s.He may seek to turn back the clock, said another European official, and demand that US forces stationed in the Baltics, Poland and other former communist countries return, raising concerns about further Russian land grabs without American troops there to guarantee their defense.Such an outcome seemed even more possible on Thursday, when Trump’s defence secretary, Pete Hegseth, told his Nato counterparts that a reduction of US troop levels in Europe could be part of any deal.In effect, Trump is negotiating with Europe, not Russia. Europe has issued its counteroffer: treat us as a partner and give us a seat at the table.“We shouldn’t take anything off the table before the negotiations have even started,” said Kaja Kallas, the EU’s foreign policy chief, before the Nato meeting on Thursday. “It is clear that any deal behind our backs will not work. You need the Europeans, you need the Ukrainians.”That depends what Trump plans to do next, as Hegseth made clear. “Everything is on the table,” he said. “In his conversations with Vladimir Putin and Zelenskyy, what he decides to allow or not allow is at the purview of the leader of the free world: President Trump.”The question is who is in that free world now, and what is the price of entry. More

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      ‘It’s a constant weight’: Americans struggle with record credit card debt

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      US credit card debt reached a record $1.17tn in the third quarter of 2024, growing from $770bn in the first quarter of 2021 and the share of active credit card holders making just minimum payments rose to 10.75%, the highest percentage ever in data going back to 2012.The Guardian spoke with individuals around the US about their experiences and issues with credit card and other personal debt. They requested to remain anonymous for privacy concerns about personal finances.Angela, a 42-year-old teacher in Virginia, explained she and her husband had struggled with paying off about $20,000 in credit card debt accrued mostly from paying medical bills not covered by her health insurance from infertility issues.“The medicines, procedures, and travel all hit us hard,” she said. “It just piles up and it piles up and you have to miss a payment because something else in life happens, and or you don’t make the payment you want to make, and it just starts to kind of snowball on you.”The debt has made it difficult to save anything and is always looming on her.“It’s a constant weight in the back of my mind which clouds all my little joys,” said Angela. “With inflation, cost of living rising, and life, I have struggled to pay down the debt. We do less, stress about what we can spend on or can afford.”A 54-year-old woman in Ohio said she lost her job in 2024 and was not approved for unemployment benefits because she was classified as a subcontractor, adding to debt she already had from medical bills and home repairs.“I’m now unable to pay them, and I can’t find a job due to a tight market and most likely age discrimination,” she said. “My debt has escalated to the equivalent of half my typical annual income. This and the inability to find a job have left me with no choice but to remain in a very unhappy, toxic, romantic relationship.”A 35-year-old software engineer in Los Angeles, California, said she accrued significant personal debt putting herself through engineering school at the age of 29, but despite making a salary of over $100,000 a year, she still struggles with paying it off and keeping up with bills.“I’m now facing huge interest rates and can barely pay down principal balances,” they said. “Student loans only covered my rent. If additional student loans existed for people in situations like mine, I wouldn’t have needed to charge so much to my credit cards.”This week the senators Bernie Sanders and Josh Hawley introduced a bill to cap credit card interest rates to 10% for the next five years, which Trump has claimed he would support. The average credit card interest rate is 28.6%, despite banks being able to borrow from the Federal Reserve at less than 4.5%.About 82% of all US adults have at least one credit card, with the average about four credit cards per US consumer, according to Experian, and the average household has over $21,000 in credit card debt.A 69-year-old retiree in Moody, Alabama, said she lived check to check on social security and had had no choice but to rely on credit card debt for food, bills and other living expenses.“I am constantly stressed about money,” she said, adding it had created anxiety, depression and sleeping issues.A 47-year-old teacher in Mesa, Arizona, said he had fallen into debt trying to provide for a family of four, and covering the funeral costs for his mother, even as he said he had been “working my car to the bone for gig work to pick up the slack”.A 72-year-old in California said she only made a little over $1,200 a month from social security, but more than half of it went toward a debt consolidation payment.“Money is always an issue with me, I’m currently keeping my debt at bay with loans out of what little I have for retirement, but still losing about half my monthly income to debt repayment that I wish I could be saving for a home.”A 53-year-old in Connecticut explained he had fallen into significant credit card debt after losing his small business due to the pandemic shutdowns, from barely ever using credit cards to maxing out several, even after finding a job, which was difficult at his age.“The pay was a fraction of what my business was pulling in and at this point, I maxed out the credit cards as I didn’t have a lot of credit on them to begin with. I have since taken out two personal loans and got a third credit card. All of them are maxed out,” they said. “I’ve gained 60lb, my hair has been falling out, and I can’t sleep more than four hours a night.”Money owed on revolving debt grew 52.5% to $645bn, from a decade low of $423bn in second quarter 2021, according to a report by the Philadelphia Federal Reserve.Twenty-three per cent of Americans with less than $25,000 annual income have no bank account. Forty-six per cent of Americans with annual incomes between $50,000 and $99,999 carried a credit card balance, while low-income Americans were more likely to predominantly use buy now, pay later, payday or pawn shop loans, with average annual interest rates of payday loans at 400%, with many much higher.According to data from the US Federal Reserve, 6% of Americans used a payday loan in 2023, up 1% from 2022, with users more likely to be low-income, Black and Hispanic adults, and adults with a disability.David, a 57-year-old gig worker and educator in Philadelphia, Pennsylvania, said he first took out a payday loan about six years ago when he lived in Oklahoma and had just started a new job and needed a loan to bridge the gap between paychecks.He said he was offered more money for the loan than he asked for, and as he made payments, the lender frequently offered to extend him more credit.“They report every late payment, every non-payment to the collection agencies, and I got into a merry-go-round, in over my head, and it wrecked my credit score,” said David. “There’s no negotiating, settling, or anything like that with payday lenders.”He said the collection tactics included calling his place of employment, calling the references on his initial loan application, to demand payment from him, which continued to grow with high interest rates and added fees. The length of time and impact it had on him had given him major depression and suicidal thoughts, he said.“They’re so predatory on very vulnerable people,” he added. “I can’t even get my own apartment without a co-signer. It’s just humiliating.” More

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      Poor reviews, missing product: firms’ anti-woke offerings soak consumers

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      Rightwing companies are attempting to “bilk” conservative Americans by pushing “anti-woke” products including razors, chocolate and floor cleaner, an analyst said, as the Daily Wire news outlet launched a “reclaim masculinity” multivitamin.The launch of the “manly green vitamin capsules”, which cost 10 times more than Centrum-branded multivitamins, fits into an emerging pattern of companies selling what they claim are masculine products in reaction to big brands allegedly embracing liberal values.In an article announcing its multivitamin, the Daily Wire asked readers if they wanted to “buy your men’s health products from a company that partners with drag queens and supports radical organizations that push gender procedures on children”. It did not name any particular company, but the “us v them” dynamic used by the Daily Wire and others is clear.Buying and consuming the multivitamin will help with that, the Responsible Man website says. It adds that the product, which comes in “manly green vitamin capsules”, “may be the finest Men’s Multivitamin on the market”.One of the best-known of the rightwing products, Jeremy’s Razors, was launched by the Daily Wire, a rightwing news operation, in 2022, while last year a Georgia man launched Ultra Right Beer, a rightwing alternative to Bud Light, after the latter ran a limited ad campaign with Dylan Mulvaney, a trans activist.Both products have received poor reviews, but that hasn’t stopped the Daily Wire from entering into the world of vitamins.“As a man, you have people relying on you and the world conspires to see you fail,” claims the Responsible Man multivitamin website, which was launched by the Daily Wire at the start of May.“With so much chaos and uncertainty, it’s crucial to take charge of your life and responsibilities.”As Media Matters reported, the site is promoting its multivitamin as a response to what it calls a “woke mind virus”, which it vaguely claims is infecting US corporations.This isn’t the Daily Wire’s first foray into selling rightwing products. Its co-founder and co-CEO Jeremy Boreing launched Jeremy’s Razors in 2022, after the razor company Harry’s said it would stop advertising on the Daily Wire.Going back further, brands such as Black Rifle Coffee have championed their conservative leanings to appeal to Republican-supporting consumers, while PublicSquare – like Amazon, but for people who “respect traditional American values” – has been backed by Donald Trump Jr.“What’s newer, I think, is we’ve seen from the Daily Wire in particular a sort of range of issues in which the media outlet side is kind of creating demand for particular products by tearing down particular companies,” said Matt Gertz, senior fellow at Media Matters, a progressive watchdog group.“And then on the business side, they’re creating a supply of products that they can endorse and sell, so that people can buy them instead.”Jeremy’s Razors has continually received poor reviews – “Absolutely terrible … Would rather use products from a woke company than rip my skin off with Jeremy’s Razors,” one person wrote on the company’s Facebook page in March – but that hasn’t stopped the company, and what seemingly began as a fit of pique has since evolved into a whole range of Jeremy’s products.skip past newsletter promotionafter newsletter promotionThere’s an all-purpose cleaner: “Sure to wipe out woke,” the blurb says; a shampoo: “Softens hair, not masculinity”; and a hand soap: “You’re not responsible for woke culture, and you don’t have to participate in it either. Wash your hands of it all.”“They’re attacking existing men’s health companies, saying that they can’t be trusted and are bad. And then they are providing you instead with an alternative,” Gertz said.“You just have to give them money and they will give you a product that I guess you can feel more politically comfortable with. Effectively what we see on the right is they create a very dedicated audience and then they bilk them for all they’re worth.”Notably, with many of the rightwing companies, commitment to non-woke causes comes at a price. Ultra Right beer retails at $45 for 24 beers, about twice the price of the liberal Bud Light. The Daily Wire’s multivitamin costs $39.99 for a 30-day supply – about 10 times the price of Centrum multivitamins.There’s a risk for the customer, too, even aside from the irritation allegedly caused by Jeremy’s Razors.Ultra Right Beer earned an F rating from the Better Business Bureau in January, after it received 175 complaints in six months – mostly for not delivering beer people had paid for.“​​Ordered 6 months ago. Tried to call no answer, emailed several times, no reply. Complete disgraceful fraud,” one person wrote on the Ultra Right Beer Facebook page.“I was duped!” More

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      Could you get by on a measly $43,000 a month? It seems Rudy Giuliani can’t | Arwa Mahdawi

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      ‘Bankruptcy” is a surprisingly amorphous term. For poor people, it means not having any money. For corporations and the super-wealthy it means a nifty legal strategy that can shield their riches from lawsuits. And for Rudy Giuliani, the disgraced former mayor of New York City and personal attorney of Donald Trump, it means being forced to try to subsist on a measly $43,000 (£34,200) a month.Half a million dollars in spending money a year might seem a princely sum to the common man, but “Sir” Rudy (recipient of an honorary knighthood) is anything but. We’re talking about a gentleman with elevated tastes here: a bon vivant who, during a legal battle with his estranged third wife, was accused of spending $7,000 on fountain pens and $12,000 on cigars over a five-month period. In that same timeframe, his ex-wife’s lawyer claimed he spent $286,000 on his alleged lover, $165,000 on personal travel and $447,938 “for his own enjoyment”. That’s a lot of enjoyment.Giuliani’s spendthrift ways are now facing legal roadblocks. In December, a judge ordered the 79-year-old to pay $148m in damages to two election workers he had baselessly accused of rigging votes in the 2020 US election. Almost immediately, Giuliani – who owes creditors $152m in total – filed for bankruptcy. Because he is a responsible citizen, Giuliani prepared a strict budget and told a federal bankruptcy court in January that he would spend no more than $43,000 a month. This was supposed to cover necessities and not include frivolities such as entertainment.Alas, budgeting doesn’t seem to come naturally to Giuliani, who ended up frittering away almost $120,000 in January alone (more than double the median US annual salary). It is not entirely clear where all this money went but, according to the New York Times, the information Giuliani provided to creditors’ lawyers listed “60 transactions on Amazon, multiple entertainment subscriptions, various Apple services… Uber rides and payment of some of his business partner’s personal credit card bill”. He hasn’t submitted detailed information about his finances since, so it’s unclear if this level of spending has continued. Still, someone needs to change that man’s Amazon password, stat.By now, it seems clear that Giuliani, whose fall from grace has been dizzying, needs quite a bit of help. And, you know what? I am happy to give it to him. I may not be a financial adviser, but I am a geriatric millennial who came into the working world during the 2008 recession – which means I have heard a lot of budgeting tips over the years. Don’t eat avocado toast if you ever want to buy a house, don’t get takeaway coffee, live on foraged beans and pond water, never leave the house. No doubt you’ve seen all these tips too – there’s always a helpful multimillionaire doling out advice to us plebs on how to pull ourselves up by our bootstraps. Kirstie Allsopp, the daughter of landed gentry, for example, has insinuated the affordable housing crisis is overblown, and anyone can buy a house if they just cut out Netflix and gym memberships. More recently, the CEO of Kellogg’s suggested that families who were having a hard time making ends meet might consider eating cereal for dinner.Giuliani can certainly try swapping out his lobster bisque dinners for Rice Krispies, but I’m not sure it’ll make a dent in the $152m he owes. It might be more effective, I reckon, if he takes a break from marrying and divorcing. This appears to be an extremely expensive habit of his: thrice-wedded Giuliani has spent millions on acrimonious divorce proceedings. (Fun related fact: Giuliani’s first wife was his second cousin and, after 14 years, they annulled the marriage because they hadn’t got the correct dispensations for cousin-marrying.) Another top financial tip is to avoid being charged with multiple crimes: lawyers are very expensive.If he can’t save his way out of financial ruin, Giuliani can do what conservatives like him are always telling the rest of us to do: work harder. He faces being disbarred, so lawyering probably isn’t an option. But the man can always go back to selling personalised videos at $375 a pop on Cameo. He has clearly got a knack for it: last year, a video of him reciting “I’m a little teapot” went viral. Now if he’s just a little teapot 405,333 more times, he should be out of hot water. More

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      ‘Totally devastating’: borrowers on the start of student loan repayment

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      Millions of Americans over the last three years experienced what it was like to live without student debt. For many, that meant hundreds of dollars a month that went toward life’s other expenses – rent, buying or maintaining a home, supporting family. The relief was also coupled with hope: Joe Biden announced in August 2022 a plan to cancel $10,000 in loans for low- and middle-income borrowers.But now, the reprieve for borrowers is coming to an end. Republicans forced an end to the pause in student debt repayments during the debt ceiling debate and student loans payments will begin again in October. In a second blow, the supreme court struck down Biden’s forgiveness plan earlier this summer.The impact is broad. About 12% of the US population has student loans, over 43 million Americans hold a collective $1.7tn in debt. The youngest borrowers have just graduated from college and some of the oldest have retired with student loans. Many parents who took out loans to pay for their children’s education are also still burdened by debt.The Guardian asked US student loan borrowers what forbearance meant for them. Their answers give a glimpse into the impact that student debt has beyond the numbers.‘We were able to afford our first home’Homeownership is the primary way Americans build their wealth. For many with student debt, buying a home can feel impossible. A poll from the National Association of Realtors from 2021 found that 60% of millennials who don’t own a home pointed to student debt as the main reason.But the payment pause, tied with low interest rates, allowed some student borrowers to put down a mortgage for their first home.Lauren Segarra, 41, a speech-language pathologist in Atlanta, Georgia, said the payment pause enabled her family to buy a home.“That extra cash put us over the threshold of being able to afford our first home,” Segarra said, adding that the pause – along with being in the Public Service Loan Forgiveness (PSLF) program – allowed her and her husband to save about $12,000 in cash. “We were able to responsibly put a down payment on a home without wiping out our savings.”The real estate company Zillow estimated that those with student loans in 29 out of the 50 largest housing markets in the US saved the equivalent of a 5% down payment on an entry-level home in their market, allowing people like Segarra to become homeowners.But the narrow window for affordable homeownership seems to have passed: Zillow reported that the principal and interest on a new home have now doubled since March 2020 because of record-high interest rates and soaring home prices. Now that payments are set to restart, homeownership for many will continue to be out of reach.‘I paid off $7,000 in medical debt’One out of 13 student loan borrowers are currently behind on other debt, a higher proportion than before the pandemic, the Consumer Financial Protection Bureau (CFPB) reported in June.Credit card debt has soared during the pandemic, especially over the last year as inflation reached record highs. The total amount of credit card debt in the US hit $1tn, the Federal Reserve Bank of New York reported in August, a record high. In a recent survey, 46% of those with credit card debt say they are still trying to pay off an emergency expense, including car or home repairs or medical bills. About a quarter said that everyday expenses, including groceries and childcare, have caused their bills to rack up.And this credit card debt is on top of other medical debt, which totaled $195bn in 2019. According to Kaiser Family Foundation Health News, one in 10 American adults owe more than $10,000 in medical debt.Lydia Gay, 36, a costume maker and tailor based in New York, said the student loan payment pause helped her pay off her medical debt.“It allowed me to save and pay off over $7,000 in debt from medical expenses, mostly from a couple of years of monthly insurance premiums,” she said. The Writers Guild of America (WGA) and Screen Actors Guild (Sag) strikes in Hollywood have meant she can only find part-time work, but “I have still been able to pay for rent and basics because I don’t have $400 a month coming out for student loans.”Gay said she is concerned about what the end of the pause will mean for her finances now, especially as there continues to be less work in her industry.“I’m extremely worried about being able to pay rent, bills and basics, along with student loans,” Gay said. “The stress and worry have even been affecting my sleep and mental health.”‘It allowed me to save money’A majority of Americans – as many as 61%, according to a recent survey – live paycheck to paycheck. More than one in five Americans don’t have emergency savings.For some student loan borrowers, forbearance empowered them to build up savings for the first time.“The pause has been a massive relief and allowed me to save more money,” said Brooke McGeorge, 26, a non-profit program assistant based in San Diego. “Knowing that loan repayment is kicking in again with no follow-through on promises for debt relief feels like a punch to the gut.”With forbearance ending, borrowers say they are worried about the strain that it will have on their finances once again.Ben Birkinbine, 41, an assistant professor based in Oshkosh, Wisconsin, had a daughter in late 2019, right before the pandemic began. During forbearance, his family moved back to Wisconsin to be closer to family. While the pause allowed him and his family to buy a home, he took a pay cut and has less job security.“Our budget is very tight and will be for at least another two years,” Birkinbine said, noting that childcare costs, in particular, have been rising. “Saving will be very difficult, and we will likely need to cut into existing savings to meet payments.”As much as the payment pause was a welcomed respite, the return to payments for many borrowers feels a bit like betrayal, especially when $10,000 in forgiveness seemed to be a reality just a year ago.McGeorge, echoing the frustration of fellow borrowers, said she is frustrated that the supreme court blocked Biden’s forgiveness plan, which many had hoped would help ease repayments starting.“It’s totally devastating,” she said. “Americans should have a chance to be optimistic about the future, but things that used to be so basic like affording good food and buying a home, are feeling more and more like a pipe dream.” More

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      US pension funds are on the brink of implosion – and Wall Street is ignoring it | David Sirota

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      US pension funds are on the brink of implosion – and Wall Street is ignoring itDavid SirotaPrivate equity firms managing millions of Americans’ retirement savings may be inflating their investments As public officials across America prepare to funnel even more of government workers’ savings to private equity moguls, an alarm just sounded for anyone bothering to listen. It is a warning that Wall Street executives, busy skimming fees off retirement nest eggs, want you to ignore. The longer the warning goes unheeded, however, the bigger the financial time bomb may be for workers, retirees and the governments that pay them.The world economy faces a huge stress test in 2023 | Kenneth RogoffRead moreEarlier this month, PitchBook – the go-to news outlet of the private equity industry – declared that “private equity returns are a major threat to pension plans’ ability to pay retirees in 2023”.With more than one in 10 public pension dollars invested in private equity assets – and with states continuing to keep their private equity contracts secret – PitchBook cited a new study finding that losses from the investments may be on the horizon for retirement systems that support millions of teachers, firefighters, first responders and other government employees.“Private equity returns get reported on a lag of up to six months, and with each update in 2022 values were coming down – which means 2022 numbers were including overstated private equity asset valuations and 2023 numbers are going to incorporate those losses,” noted the study from the Equable Institute.To comprehend this timebomb, you have to understand private equity’s business model.In general, private equity firms use pension money to buy up and restructure companies to then sell them at a higher price than they were purchased. In between buying and selling, there are no transparent metrics for valuing the purchased asset – private equity firms can manufacture an alleged value to tell pension investors (and there’s evidence they inflate valuations when seeking new investments).In a story about an investor receiving two different valuations for the same company, Institutional Investor underscored the absurdity: “Everyone Wants to Know What Private Assets Are Really Worth. The Truth: It’s Complicated.”Meanwhile, valuation and fee terms in contracts between private equity firms and public pensions are kept secret, exempt from open records laws.With that in mind, the new warnings are simple: private equity firms may have told their pension officials that their assets were worth much more than they actually are, all while the firms were skimming billions of dollars of fees off retirees’ money.If write-downs now happen, it could mean that when it’s time to sell the assets to pay promised retiree benefits, pension funds would have far less money available than private equity firms led them to believe. At that point, there are three painful choices: cut retirement benefits, slash social programs to fund the benefits, or raise taxes to recoup the losses.Signs of a doomsday scenario are already evident: some of the world’s largest private equity firms have been reporting big declines in earnings, and federal regulators are reportedly intensifying their scrutiny of the industry’s write-downs of asset valuations. Meanwhile, one investment bank reported that in its 2021 transactions, private equity assets sold for just 86% of their stated value last year.How to fight inflation? (Spoiler alert: not with interest rate rises) | Joseph StiglitzRead moreBut while pensioners may be imperiled, Wall Street executives are protected thanks to their heads-we-win-tails-you-lose business model. While reporting asset losses for investors, some of the firms managing pensioners’ money are raking in even more fees from investors and continuing to raise executives’ pay.Meanwhile, even as some sophisticated private investors rush to get out of private equity, the world’s largest private equity firm, Blackstone, recently reassured Wall Street analysts that state pension officials will continue using retirees’ savings to boost revenues for private equity firms, hedge funds, real estate funds and other so-called “alternative investments”.“The desire for alternatives remains very strong,” the president of Blackstone, Jon Gray, said in an investor call last week. “New York’s state legislature actually increased the allocation for the big three pension funds here by roughly a third.”Gray was referring to New York Democratic lawmakers passing legislation significantly increasing the amount of retiree money that pension officials can deliver to Wall Street. The bill was championed by the New York City comptroller, Brad Lander, just weeks after the Democrat won office promising he would be “reviewing the funds’ positions with risky and speculative assets including hedge funds, private equity, and private real estate funds”.The New York governor, Kathy Hochul, quietly signed the legislation on the Saturday before Christmas, just weeks after the Wall Street Journal reported that analysts have started warning pension funds of looming private equity losses. New York lawmakers simultaneously rejected separate legislation that would have allowed workers and retirees to see the contracts signed between state pension officials and Wall Street firms managing their money.The Empire State is hardly alone in continuing to use retirees’ money to enrich the planet’s wealthiest financial speculators – from California to Texas to Iowa, pension funds controlling hundreds of billions of dollars of workers’ retirement savings are planning to dump more money into private equity, while keeping the terms of the investments secret.While globetrotting to elite conferences in exotic locales, pension officials have defended the high-fee investments by parroting Wall Street executives’ claim that private equity reliably outperforms low-fee stock index funds. At the same time, those officials continue to conceal the terms of the investments, raising the question: if the investments are so great, why are the details being hidden?Perhaps because the investments aren’t as wonderful as advertised. In a landmark study entitled An Inconvenient Fact: Private Equity Returns & the Billionaire Factory, Oxford University’s Ludovic Phalippou documented that private equity funds “have returned about the same as public equity indices since at least 2006”, while extracting nearly a quarter-trillion dollars in fees from public pension systems.A 2018 Yahoo News analysis found that US pension systems had paid more than $600bn in fees for hedge fund, private equity, real estate and other alternative investments over a decade.“The big picture is that they’re getting a lot of money for what they’re doing, and they’re not delivering what they have promised or what they pretend they’re delivering,” Phalippou told the New York Times in 2021.Even some on Wall Street admit the truth: a JP Morgan study in 2021 found that private equity has barely outperformed the stock market, but it remains unclear whether that “very thin” outperformance is worth the risk of opaque and illiquid investments whose actual value is often impossible to determine – investments that could crater when the money is most needed.While the warnings have not halted the flood of pension cash to private equity, they have broken through in at least some corners of American politics.The Securities and Exchange Commission is considering new rules to require private equity firms to better disclose the fees they charge.The US should break up monopolies – not punish working Americans for rising prices | Robert ReichRead moreSimilarly, Ohio’s state auditor, Keith Faber, just issued a report sounding an alarm about state pension officials keeping private equity contracts secret – a practice replicated in states across the country.And following a pension corruption scandal in Pennsylvania – whose state government oversees nearly $100bn in pension money – there’s a potential financial earthquake: during his first week in office, Governor Josh Shapiro promised to shift pensioners’ money out of the hands of Wall Street firms.“We need to get rid of these risky investments,” Shapiro told his state’s largest newspaper. “We need to move away from relying on Wall Street money managers.”Shapiro could face opposition not only from private equity moguls and their lobbyists but also from the pension boards’ union-affiliated trustees. As the Philadelphia Inquirer reported: “Union members [on the boards] have mostly favored the old strategy of private investments, even when challenged by governors’ reps and the last couple of state treasurers.”When investment returns were somewhat better, the unholy alliance between some unions and Wall Street firms flew under the radar, even as pension funds were ravaged by fees. But with warnings of write-downs and losses getting louder, the dynamic could change.Better late than never – though the later it gets, the bigger the risk for millions of workers and retirees.
      David Sirota is a Guardian US columnist and an award-winning investigative journalist. He is an editor at large at Jacobin, and the founder of The Lever, where this article also appeared. He served as Bernie Sanders’ presidential campaign speechwriter
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      ‘Who should pay?’: student debt relief in limbo as supreme court decides fate of millions

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      ‘Who should pay?’: student debt relief in limbo as supreme court decides fate of millions Over 26m student loan borrowers are waiting for the country’s highest court to decide if they can receive debt reliefDebt-laden borrowers will be nervously watching the US supreme court come February when the justices hear arguments for two cases that will ultimately decide the fate of over 26 million student loan borrowers who have applied for loan forgiveness.US student debt relief: borrowers in limbo as lawsuits halt cancellation programRead moreThough the future of student loan forgiveness is uncertain in the hands of a deeply conservative court, two researchers who have studied public opinion on student debt and college accessibility see room for optimism, even amid uncertainty around the issue.The millions of Americans who applied were set to get at least $10,000 (£8,320) in relief for their loans under a plan that Joe Biden released over the summer. But the plan’s rollout was halted in November by a Trump-appointed federal judge in Texas, putting the possibility of forgiveness into question.“[Student loan forgiveness] is something that five years or 10 years ago, we wouldn’t have seen. It shows that there’s movement for politicians and the public to do something about student debt that has meaningful effects for a lot of people,” said Natasha Quadlin, a professor at University of California, Los Angeles who co-wrote a book this year, Who Should Pay?: Higher Education, Responsibility and the Public that documents the change in public opinion on how much the government should pay for higher education.Quadlin, along with her co-author Brian Powell, a professor at Indiana University, started administering surveys in 2010 asking people who should pay for college: parents, students or the government.In 2010, nearly 70% of respondents believed that only parents and students should be funding higher education. In 2019, the number dropped to 39%. Meanwhile, the percentage of people who believe the government, both federal and state, should primarily fund college rose from 9% in 2010 to 25% in 2019. All other respondents indicated that the government should help parents or students pay for college.When Quadlin and Powell set off to do this decades-long research in 2010, they did not realize how dramatically people’s perspectives on who should pay for college would change.“When we started working on the book and collecting data, the idea of loan forgiveness was not even really part of the American consciousness,” Powell said.The researchers note a few factors that went into this rapid shift. First, student debt nearly doubled in size between 2010 and 2015, reaching $1.3tn (£1tn) by the end of 2015. The cost of college was also rising, especially since states were slashing higher education budgets during the Great Recession.Fight against inflation raises spectre of global recessionRead more“It became apparent that the current generation that was going through higher education just wasn’t getting a very good deal in terms of the returns they were seeing,” Quadlin said.Some respondents also noted that the Affordable Care Act, passed in 2010, showed them that government can offer broad support for certain areas of life.“Several people said: ‘If we can do this for something as important as healthcare, and ensure health insurance, then we should be able to do that for education as well,’” Powell said.Sentiment had changed so much that some states were discussing the possibility of free college, a policy that Quadlin and Powell did not even consider putting on their survey in 2010. By 2019, over 20 states offered programs that either reduced or eliminated the cost of public college. Nearly 40% of respondents on the survey strongly and 32% somewhat agreed that public college should be free for those who are qualified to attend.Loan forgiveness and free college, while similarly addressing accessibility to higher education, are ultimately two different issues. While the researchers note that both should be pursued simultaneously, it appears that much of the current focus is on addressing debt forgiveness as the immediate problem.How quickly either will be addressed is unclear, but “the costs and burden [of student debt] is so high and so widespread”, Quadlin said.“There is a recognition that college is necessary for such a large percentage of the problem … and [its] not getting fixed,” she said.Throughout the book, Quadlin and Powell note how quickly public opinion had changed on same-sex marriage in a short amount of time. Powell, who has studied this change in opinion, noted that Congress just recently passed a bill protecting same-sex marriage with bipartisan support. In 2010, Gallup reported 28% of Republican support same-sex marriage. In 2021, the percentage rose to 55%.While Republicans have largely been against Biden’s student loan forgiveness plan, there is some evidence that there could be Republican support one day. In 2014, Tennessee, under a Republican governor, created a scholarship program for free community college – an initiative that is still thought to be too radical at the federal level.“We’ve had examples of bipartisan support. Education is one of those areas that people believe in – the American Dream, that people can be able to have the education they need to have a fulfilling life and successful career,” Powell said. “It’s hard to envision the changes in the past year without the dramatic change in public opinion that occurred in a really short period of time.”TopicsUS student debtHigher educationUS politicsRepublicansDemocratsBiden administrationDebt relieffeaturesReuse this content More