The corporate MSM continues to do their part. They reported STRONG growth in consumer credit in September. That is awesome. Strong is such a great word. It make me feel good, because we all know taking on more debt is always a good thing in America. Just one little problem when you actually look at the data.
http://www.federalreserve.gov/Releases/g19/current/default.htm
Non-revolving credit jumped by $14.3 billion to an all-time record of $1.885 trillion. It was at $1.52 trillion in 2007, before the financial crisis. Revolving credit (also known as credit card debt) fell for the 2nd straight month and is now at the same level as the fourth quarter of last year. It is $158 billion below the level of 2007. With no income growth and declining credit card spending, can someone explain how retailers are going to increase sales?
Non-revolving credit is made up of two main pieces – student loan debt and auto loan debt. The STRONG growth in consumer credit was attributed to a $13.8 billion SURGE in student loan debt and a $500 million increase in auto loans. What do these two areas have in common? You guessed it – Obama is spreading the debt around. The Federal government is taking your tax dollars and doling it out to clueless University of Phoenix enrollees getting an online degree in African Studies or Lesbian Literature. His friends at Ally Financial are making sure everyone in West Philly gets their very own Cadillac Escalade. Credit scores be damned.
So this is your STRONG demand story in a nutshell. So it goes.
Consumer credit jumps again in September
The “credit system” spins apart – the center cannot hold !
“All the King’s horses and all the King’s men couldn’t put Humpty together again”
(But Bennie sure is trying)
In September Uncle Sam Continued To Hand Out Car And Student Loans Like A Drunken Sailor
Submitted by Tyler Durden on 11/07/2012 15:26 -0500
Following one of the highest monthly jumps in consumer credit in August, the September data showed that following the drop in household savings to a multi-year low, consumers naturally retrenched, and had no choice but to pay down debt. As the just released G.19 confirmed, in September, households once again reduced their credit card debt, which declined by $2.9 billion to $852 billion. This was the fourth such decline in six months, confirming that at the discretionary level where banks have supervision over borrowings, the consumer is still nowhere near willing to relever. Where, there was leverage, a lot of it, was once again in the government sector, which funded $13.8 billion of the total $14.6 billion rise in NSA credit, and where non-revolving credit: read loans for Government Motors, at least those that have not been record channel stuffed (as reported previously) and Federal Student Loans, which are now over $1 trillion, rose by $14.3 billion in one month. Of course, the difference between revolving and non-revolving credit is that while banks expect the former to be paid off eventually, Uncle Sam has no such illusions on any low APR debt it hands out to anyone who asks for it (and if the proceeds from student loans are used to purchase iPads, so be it).
You can actually get a degree in lesbian lit?
I learn something new every day. That would be a good study for our friend Flash!
I don’t think the student debt will be forgiven…or paid back. It will just turn a generation of foolish young people into lifetime debt serfs.
Many of them will no doubt default, and since there is no way to ever clear their credit, they will be pushed completely out of the regular credit markets. No mortgages, not car loans, no nuthin’. That will be the ultimate situation for many of them.
They will be pushed into a growing underground economy to avoid wage garnishments and taxation. 50% of the Greek economy is off the books. I wonder how long it will take us to get there, and how that will affect federal tax revenue.
I don’t know about that Eddie.
Think about it.
Obama can just write off hundreds of billions in student loan debt and mortgage debt, insuring that the Democratic Party gains 5 million more automatic voters. The bill will just be added to the national debt. No biggie.
Keep in mind that a great deal of the “reduction” in credit card debt owed not to consumers paying off their CC debt, but to write downs for delinquent debt.
Banks are holding all that student loan paper. It’s probably rated AAA+++ and there are probably a bazillion derivatives out there betting on the outcome. Sound familiar?
I await the entry of the Federal Reserve into the student loan market. Then I’ll know the situation is hopeless.
Eddie-
I’m a recent graduate with a science degree (and a veteran which may be a liability) and well, the underground economy is really the only hope I see out there. Entry level positions are, well, not entry level positions. And when true entry level positions appear the competition is undoubtedly so fierce that the average joe isn’t going to be able to truly compete. It’s the green gold rush for me, friends.
See. Micro-Be is one of the smart ones.
Build community, Micro. It’s going to be worth more than money.
Eddie-
Music to my ears, man. Community is lost. Everyone is so busy watching television and remodeling their McMansions for whatever reason. It seems that knowing your neighbors is now a function of mimicking relationships on television (I’ve seen great exceptions to the rule lately). The churches here in America have outsourced their care, so-to-speak, and have neglected the people in their neighborhood. Sure, they give some token canned foods and ladle slop on Thanksgiving, but they have neglected the community. It seems everything is a show, for show, for an audience of fellow performers concerned about their performance. Unfortunately, I’m probably going to go expat to Asia once I’ve made some cash. Glad to hear from you.
The combined public and private debt cannot possibly be paid off or even serviced. Therefore, it WILL NOT be paid off.
So what’s going to become of all the debt? There’s going to be some kind of “debt jubilee” – I’m 100% certain of it. We live under tyranny of the majority, and the majority has debt – ergo they’re going to get rid of it. Who’s gonna stop them? Their guilty conscience? The Constitution ? Indignant bloggers? If you think it can’t happen, contact a few Delphi retirees or some former GM bondholders and see how their legal rights worked out for them.
You have no “rights.” “Rights” exist in a republic, but the republic is dead, the constitution is dead – hence your rights are dead. The aristrocracy will change the rules as needed to screw you over.
The federal reserve will never redeem any of the bonds or other toxic shit that its holding. If that causes “balance sheet” problems, it will just rip up the “balance sheet” and make a new one.
THERE ARE NO RULES NOW.
Study the tactics of Hugo Chavez for a while. This is what we’ll see.
[img]http://market-ticker.org/akcs-www?get_gallery=3686[/img]
admin
This does not include mortgage credit, right? Just fixed payment installment credit like car loans and student loans?
I’d like to see figures on new mortgages, especially what percentage of them is fixed vs. ARM these days . Maybe I can find that somewhere.
Eddie
That chart excludes mortgages.