How can we be having an economic recovery when debit card usage is plunging and pending home sales are declining during the biggest home selling season? The answer is that we aren’t having an economic recovery. The consumer is dead in the water. They aren’t using their debit cards because there is no more cash left in the checking account to debit. As a last gasp, they are again turning to their credit cards to make ends meet. One little problem. That just delays the time when they have to pay. And if the cash isn’t in the checking account today, it won’t be there next month either. Do you think the Wall Street banks will be able to reduce their loan loss reserves in the next year? Not bloody likely. There is a tsunami of bad debt building up again. Millions have fallen off the 99 week UC rolls. There is nothing left to pay the bills and there is nothing coming down the pike from the Obamanistas to save the day.
The data today from Visa is a sign of desperation and coming consumer collapse. Retailers will be crushed. Mall owners will be crushed. The banks that loaned the money to the mall owners will be crushed. Delusions and illusions will be crushed.
Pending home sales should be going up as people sell their houses in the summer in order to get their kids set up for the coming school year. The NAR said they would rise this month. Instead they fell. And last month’s number was revised downward. We’ve got the lowest mortgage rates in history and pending home sales are falling. That sure sounds like a healthy housing market.
The data tells a story – a story with an unhappy ending. We are in recession today. Hussman is right. ECRI is right. The data proves it. Only dumbasses and pathological liars say otherwise.
Debit Usage Collapses At Visa As Consumers Shift Back To Credit
Visa offered some disappointing data on payment trends this morning in a new 8-K filed with the SEC.
The key takeaway: debit transactions collapsed as consumers shifted to credit.
From the release (emphasis added):
For the month of April 2012, U.S. aggregate payments volume growth was negative 3% versus U.S. aggregate payments volume for the prior year period. Further broken down, U.S. credit payments volume growth was positive 8% and debit payments volume growth was negative 12%. Cross border volume growth on a constant dollar basis was positive 13% globally over the prior year period. Processed transactions growth was negative 1% globally.
Through May 28, 2012, U.S. aggregate payments volume growth was 0% versus U.S. aggregate payments volume for the prior year period. Further broken down, U.S. credit payments volume growth was positive 10% and debit payments volume growth was negative 8%. Cross border volume growth on a constant dollar basis was positive 13% globally over the prior year period. Processed transactions growth was positive 1% globally.
Visa shares were nearly two percent lower in pre-market trading.
NAR: Pending home sales index declined 5.5% in April
The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflects contracts but not closings.
Administrator says:
By Matt Andrejczak
SAN FRANCISCO (MarketWatch) — Sears was the top percentage decliner on the S&P 500 early Wednesday, falling 8% to $52.91. In the retail sector, Kohl’s also faced selling pressure, slipping 4% to $48.60, while struggling retailer J.C. Penney slumped 3% to $27.15. Analysts at Deutsche Bank suggested J.C. Penney is making more changes to how it sets its prices under its new management team. Overall, the S&P Retail Index fell 1.6% amid a sell off in the broader U.S. market.
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30th May 2012 at 10:54 am
Administrator says:
Buyer Beware
http://www.321gold.com/editorials/russell/russell053012.html
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30th May 2012 at 11:00 am
sensetti says:
Admin…admin… .admin, we have turned the corner my friend, get in line. Obama just needs 4 mo years to complete the task at hand, he says the recovery has begun, you must have hope.
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30th May 2012 at 11:58 am
Administrator says:
By Wallace Witkowski
SAN FRANCISCO (MarketWatch) — Home builder stocks dropped Wednesday after a report that pending home sales fell for the first time in four months. The iShares Dow Jones U.S. Home Construction Index Fund fell 4.2% after the National Association of Realtors said pending home sales for April fell to 95.5 from a downwardly revised 101.1 in March. Shares of Lennar Corp. led the charge down falling 6.5%. Standard Pacific Corp. shares shed 6.4%, KB Home shares fell 5.8%, Toll Brothers Inc. declined 5.5%, and Hovnanian Enterprises Inc. shares fell 4.8%
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30th May 2012 at 12:11 pm
ThePessimisticChemist says:
Stuff like this makes me wonder if I should bother paying off my debt. It would be a shame for me to spend the next two years living in austerity and get stuff paid off only for every other asshole to get their slate cleaned off.
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30th May 2012 at 12:58 pm
AWD says:
TPC:
Run up the credit cards to the hilt, but only for prepping materials, guns and ammo, food etc. When it all collapses, they’ll have to come find you to collect. I recommend a 12 gauge with rifled slugs for bill collectors.
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30th May 2012 at 1:45 pm
ThePessimisticChemist says:
AWD:
Its primarily student loans. We have fairly negligible credit card debt at this point.
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30th May 2012 at 1:49 pm
ron says:
Just click on the msnbc headlines,its total denial land.Obama is doing a great job and everything is good.
I always ask if they look around them and does it seem like a booming economy and if they think the market is really this good without the fed infusing it with cash and scared europeans trying not to lose theyre money.
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30th May 2012 at 4:05 pm
Administrator says:
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30th May 2012 at 4:10 pm
Buckhed says:
I’d rather live here
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30th May 2012 at 5:04 pm
Zarathustra says:
Romney will fix everything. 70% of Texans said so, yesterday.
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30th May 2012 at 5:13 pm
DaveL says:
Nobody will fix anything. I’m betting on high inflation prior to collapse.
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30th May 2012 at 8:24 pm
douchbag says:
As far as I know, credit card debt uncolateralized.
The only thing a credit card company can do if you don’t pay is threaten and withold.
They can’t garnish wages. They can’t take any stuff. They can’t take your house. They can’t freeze your bank account. They can’t send you to prison.
They can ruin your credit rating for a few years. they can put a lien on property (that can be erased in a bankruptcy). And they can decline you credit. That’s all.
To paraphraze the immortal John Lennon…..
….Imagine all the people carryin those low scores you-hoo-oo-hoo
You may say I’m a dreamer, but I’m not the only one
I hope some day-ay-ee-ay you’ll join us
And the score will be just one.
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30th May 2012 at 10:03 pm
douchbag says:
“is” uncolaterlized
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30th May 2012 at 10:04 pm
Novista says:
douchbag
~They~ can sell your debt to a collection agency, maybe more than one. Do pay attention, this IS happening. It doesn’t matter that technically some of the debts do not exist in any credible form. ~They~ can provide ‘evidence’ of late fees and penalties that may not even exist, and whamo! someone who thought they were free and clear of the bloodsuckers, a collection thug comes calling …
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30th May 2012 at 8:38 am
prtrb'd says:
Run up your credit cards to the max, then call and request a settlement. B of A offered me 50% off if paid in 3 months. I took their offer for a 14k discount on prep material. They get bailed out, why not you too? Play by their rules and you get screwed, screwed, screwed. Wipe off the vaseline and start game changing. The sooner the system fails the sooner we can build a whole new system. The trick will be to avoid a one world system.
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30th May 2012 at 10:16 am
prtrb'd says:
For those who care about such things, a settlement shows up on your credit rating as just that- a non-disclosed settlement.
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30th May 2012 at 10:20 am
Maddie's Mom says:
prtrb’d…
Yeah, but I couldn’t live with myself after doing that.
But that’s just me.
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30th May 2012 at 10:23 am
prtrb'd says:
MM-
Are you comfortable with the gov/fed printing money from air and diluting your savings?
My take is we all need to contribute to break the system.
Please do your part too.
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30th May 2012 at 10:34 am
Administrator says:
prtb’d
Will this settlement reduce your credit score?
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30th May 2012 at 10:42 am
Maddie's Mom says:
prtrb’d,
Not comfortable at all. In fact, I’m mad as hell!!!
I get it. But there’s that damn mirror I have to look in every morning.
I’m doing all I can.
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30th May 2012 at 10:45 am
prtrb'd says:
Admin,
Not as far as I could tell, but if it’s a concern you might want to do your homework. For myself, I have for the most part dropped out of the system and don’t even have a bank account anymore. Own my land outright, grow most of my food and pay in metal where possible. I reckon more people will be coming around to this way of thinking as things progress….
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30th May 2012 at 10:48 am
prtrb'd says:
MM,
I have a mirror too, and like what I see in it. I think it’s a madder of perspective!
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30th May 2012 at 10:50 am
Maddie's Mom says:
prtrb’d…
lol…Madder. That could be my new “name”.
Just curious…do you have a spouse who understands where we’re headed and participates willingly in all your preparations?
For 5 years I’ve been educating myself and getting a grasp of our situation. Then I have invested much time and energy sharing (as much as he will tolerate) with my DH and trying to convince him to be my partner in OUR preparations for the future.
Sometimes it’s a slow go. He gets it too, but it’s also been difficult for him to let go of his preconceived notions of what the rest of our lives were going to be like.
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30th May 2012 at 11:30 am
prtrb'd says:
Madder-
Funny you should ask. My spouse refuses to entertain a doomsday scenario, maybe because it would be too negative a view of humanity. But she is slowly coming around to accepting my bent- hope for the best, prepare for the worst. Makes for a tense moment or two at times, but her intuition is same as mine, care for the earth and it will care for us, so I encourage that aspect. More than one way to skin a cat.
Oh yes, our partner’s normalcy bias can be a barrier, but we might as well get used to challenge, might be a bit more headed our way. Agrarians might fare better than urbanites, and it might come down to just a matter of skill set when the dogs start biting. But what the fuck do I know? Should be interesting anyway.
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30th May 2012 at 5:15 pm
douchbag says:
Yes. The debt settlement is reported and hurts your credit score…as much as a bankruptcy does.
The difference is: In a settlement, the lender recovers something, in a bankruptcy a lawyer gets paid.
Pick your poison, this’ll only hurt a bit…
At the end of the day, record settlements and record bankruptcies will force lenders to lend to those with lower credit scores, or make due with the thin profits of only lending to those with good reports.
Its Republicanism. Lower lending standards expands the base, lower interest rates (taxes) should expand the base’s spending and lead to more lending and thus more profit.
Just as raising lending standards (tightening tax loopholes) and higher (tax) rates, reduce the base, and the base’s spending…leading to lower profits…No?
Not republicanism?
DB
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30th May 2012 at 6:28 pm
Mary Malone says:
Be careful about the cc debt – because debtor prisons are popping up all over the USA.
The companies that “purchase” credit card debt are vultures and routinely use the courts to track down delinquent borrowers. If people fail to pay, these companies are filing charges with the courts. Warrants are issued and many consumers are doing slam time til they come up with the dough to pay.
This doesn’t just ruin your credit rating – it ruins your life.
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30th May 2012 at 11:16 pm
Thinker says:
Americans Are Still Swimming in Debt They Can’t Pay
Jun 1 2012, 4:28 PM ET 6
The Federal Reserve Bank of New York has released its quarterly assessment of America’s household debt burden, and it’s a vivid reminder of just how far the country still has to travel before it recovers from its pre-recession borrowing binge.
As shown in the graph below, total household debt currently stands at $11.44 trillion, more than a trillion dollars below it’s 2008 peak. Unfortunately that only puts the country back where it was in the first quarter of 2007. The same goes for per capita debt: today, the average American owes $47,500, roughly the same as five years ago.
Borrowers are also still having trouble paying off what they owe. Households are current on 90.75 percent of their loans, up from the nadir of 88.1 percent at the end of 2009. It’s about on par with where the country was in the fourth quarter of 2008, as the foreclosure crisis swelled into the financial crisis.
The U.S. has a lot of deleveraging ahead. It’s going to be painful. But until it’s done, households are still going to be haunted by the bad financial decisions they made before the bubble era went bust.
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30th May 2012 at 3:04 pm
Administrator says:
Thinker
It makes me so mad when the MSM reports on the $1 trillion reduction in debt without saying it was totally due to writeoffs by the banks, paid for with taxpayer funds.
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30th May 2012 at 3:14 pm
Thinker says:
Agree, Jim. Sorry those graphs didn’t post… the link contains reference to the original Fed report. Worth reading, if you can stomach the bullshit.
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30th May 2012 at 3:17 pm