The stock market continues to soar as the average American experiences recession. The 1% think everything is great. The 99%, not so much. The average American sustains themselves with their credit cards. If they feel confident about their jobs and future wage increases they are willing to buy shit they don’t need on credit. Credit card debt has collapsed by $4.7 billion in the last two months. It must be the weather. Except subprime auto and student loan debt soared to an all-time record because Uncle Sam is in control of that spigot. Bad debt is not a problem for Obama and his minions. Just a cost of keeping this Keynesian Titanic on course toward that iceberg.
Credit card debt has essentially gone flat since July of last year. It is at the same level as May 2010. It is $136 billion lower than the July 2008 peak. It is at the same level as February 2006. It seems Bernanke and Yellen can lower rates to 0% and print $3.7 trillion of new fiat, but they can’t force Americans to spend money they don’t have. Credit card debt crashes during recessions. How much more proof do we need that we are in the midst of a recession.
Revolving Debt Crashes Most In Four Years, As Student, Car Loans Go Exponential; Bank Lending Freezes
Submitted by Tyler Durden on 04/07/2015 15:20 -0400
There was only bad news in the just released Fed consumer credit report for the month of May. First, the “good credit”, the one that consumer should load up on when they feel comfortable about the future, i.e., credit card, or revolving debt, continued its recent plunge, and in February crashed by $3.7 billion, following January’s $1 billion plunge. This was the worst month for revolving credit since December 2010 and explains perfectly why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases.
This plunge, however, was more than offset by a surge in “bad” credit, the type that even Obama wants to do away with, namely non-revolving credit, mostly student and to a lesser extent auto credit. In February, this debt funded almost exclusively by the US government, soared by $19.2 billion, the highest monthly notional since July 2011!
And while we will never tire of watching just how exponential this non-revolving credit chart has gotten, here it is again, for any non-frequent readers. Truly a thing of beauty.
But all of the above was largely to be expected: it merely accelerated the unsustainable trends we have grown to love and expect from the centrally-planned economy.
What was by far the worst data, however, was when one drills down into the source of credit. It will surprise nobody to learn that for one more month, the source of debt to the US consumer was Uncle Sam himself. However, what is a big, red flag is the complete collapse in depository institutions lending: the $18.8 billion drop in bank lending was a shock to all, follows the $15.2 billion drop last month, and is the single biggest monthly drop since January 2011.
In other words, banks, which had resumed lending for a few months, have slammed the door shut on all new credit issuance, which means one things: instead of lending, the big banks are back to their old tricks to make money: prop trading the S&P and otherwise manipulating markets as only they can do (ref: see the JPM London Whale).
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I just read where about two months ago (some financial advice column) that people with FICO scores ABOVE 810 received rate increases. Because the bank can no longer pick and chose individuals (unless you don’t pay on time or go over your limit), like they used to – which singled out actual higher risks, they are just picking a range of scores and screwing us all.
Mmmm, I so wonder what a person whom does the right thing, is not ridiculously indebted, and is loyally paying their bills would do when smacked with a 2-5% interest rate increase for no reason?
I’ll just bet they would pay them off and cancel the cards, saying “screw it” to the fact that canceling cards trashes your score temporarily.
It is wrong to be hopeful of collapse, but when it comes to this insanity, would anything short of collapse (or mass executions of the 0.1% and all those that enabled them) do any good?
So very messed up is this world. So very messed up.
Repeat after me.
There will be no recession until the next president. And if it’s Clinton. Not until the next one after that. And the blame will be square on the shoulders of unfair capitalism in the private sector.
We are in Recovery, Recovery, Recovery.
@Mark, nope, there will be a recession declared, right before the election, exactly like in ’08.
I saw it coming when the Repukes took power, the lies they were spreading to keep the O’Recovery Myth alive had to slow to allow some of the reality of our plight to show, then it can be used against the Repukes come election day.
“THEY were in CHARGE! Repeat of Bush Years and Economy! Their fault!”
Puh-lease. Allowing reality to bubble through, and the influx of new illegal voters, will easily keep the Dems in power.
We are being set up as there is NO difference between the parties except on the most inconsequential issues to our collective survival. They tout out the old standards, fly their freak flags far and wide, but the truth is Obama couldn’t issue the Exec Orders he does if Bush (and a Demoncrat CONgress) didn’t write the law.
And Bush couldn’t have invaded Iraq without laws by Clinton, and both sides of CONgress.
There is NO difference. My entire life I have sat back and watched others base their choice for President on the fact of rather he stays out of other women’s wombs, or not. For over 30 years I have seen both sides beat this horse until there is nothing left of it.
Yet, besides the “economy” and which guy/gal promises more free shit that you believe will create jobs (it won’t), there it will be, front and fucking center, AGAIN.
God said don’t judge, and man shouldn’t rule men. If the conservatives truly believed what they spouted, I would not have had to see the stupidity rolled out over and over and over and over again.
Whatever. It matters not how we vote, but whom counts/reports the votes.
The Us vs Them isn’t Repuke vs. Demon, but damned if at least 80% still think that it is.
TE and Mark ,I don’t know which of yor scenarios or some other is correct. However they have it planned, I am not sure they can hold it together for another 4 years.
@Over, it is only a little over 19 months from now. I’ve already seen Ted freaking Cruz ads. I need to divorce my husband just to get away from 24/7 awake tv. The pharm ads alone are killing me.
I saw 2008 barreling down and it started in early/1st Q 2007 for the majority of the country, Michigan had been there for years already.
Phone calls, quotes, faxes, slowed way down, sales always follow. Then the flyers for manufacturing facility auctions. And receivables went nuts, good payers started paying late.
The stock market was still stable, trending lower, but stable, even after, was it Bear Stearns, or Lehmans that went earlier and first?
The reports were still being pumped full of sunshine and bullshit.
Mitt Romney and Sen. Fred Thompson, sat right in the Repuke primary in Detroit (actually Dearborn if memory serves), in August of 2008, a mere month before all hell broke loose and TARP and Stimulus 1.5 was born, and both responded about the same – as did most other candidates, seems there were one or two dissenters – to a question about the sliding US economy and jobs (we didn’t know about Wall Street and the End of the World as Banksters Run It yet).
They both said, “We know it has been tough, and Michigan is in a “one-state” recession, but blah, blah, spend, spend, help, spend, help, and the rest of the country is just fine. There is no chance of a country wide recession.
And I saw it start with the Bankster changes to credit card and other lending rules. The 2005 Bankruptcy Reform, should have been called, the 2005 Banks Can Now Rape With Impunity and By Mandate Starting in 2007 Act, as THAT was what set us off the edge of pretending to have an economy run 100% on gov spend and private debt along with false stock market valuations.
Any of this sound familiar? The PTB are 100% positive that we are so asleep, so sheep, that they can play the SAME playbook again. Why? Cause we didn’t do a DAMN thing to stop them the first 100 times.
My real question is will we admit Recession before, or after, we enter WWIII?
Gut says 9/11 ish is on deck. Only time will tell, but they are getting more brazen in the theater they perform for our continued subjugation.
@TE – The US been looking for an archduke ferdinand for awhile now, our country NEEDS another war in order to keep people from looking too hard at their “constitutional republic.”
Its a bad situation, and its gonna get worse before it gets better.
@TPC, sad days, no?
My gramps talked about the runup to WWII, and how the country was against it, then we started in on sanctions and crap against Japan, gramps said he knew they were going to do something so that ‘murkins would jump on board for war, again.
Worked then, and continues to work over and over and over again.
See what happens when we allow men to rule us? And I’m not just talking about the men with 3 legs.