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Here Is Who Is Funding Consumer Credit YTD

Tyler Durden's picture




 

Earlier today the Fed announced that consumer credit increased by $6 billion in March, $1 billion greater than expectations, with seasonally adjusted revolving credit increasing by $1.9 billion, only the second time it has grown in the past 31 months (as shown below). Non-revolving credit also increased by $4.1 billion, both number to be trumpeted in the mainstream media, as it means that in March US consumers we using the credit cards once again to lever up. Yet two things that will not be discussed is that non-seasonally adjusted credit declined for the third month in a row to $2,407.5, an $8.9 billion drop M/M, following a $16.5 billion drop in February. But probably more importantly, the question of where all this credit comes from is once again perhaps best answered graphically: second chart below. As usual, thank you Uncle Sam... Which simply means that no banks wish to lend yet again. And yes, the government is and continues to be the only major source of credit (primarily for student and car loans).

Monthly change in seasonally adjusted revolving and non-revolving credit:

And total holders (i.e., sources) of consumer credit year to date:

 

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Fri, 05/06/2011 - 16:44 | 1249149 LawsofPhysics
LawsofPhysics's picture

Once my printing license is approved, I will begin lending based on my physical gold and silver holdings.

Fri, 05/06/2011 - 16:46 | 1249156 Debtless
Debtless's picture

Just nationalize the fucking banks and end this nonsense...of course thus beginning a whole other set of fun and games. But nonetheless.

Fri, 05/06/2011 - 16:47 | 1249174 Alex Kintner
Alex Kintner's picture

Honestly with all the same crooks in charge, I'm not convinced that would help now. Of course, I was all for Nationalization back in 2008 -- you know, before the biblical looting of the taxpayers.

Fri, 05/06/2011 - 16:56 | 1249198 Jack Mehoff
Jack Mehoff's picture

Kinda like they are already?

Fri, 05/06/2011 - 17:19 | 1249285 Debtless
Debtless's picture

you mean the government is bank-owned...

Sat, 05/07/2011 - 06:37 | 1250623 Welfareisfraud
Welfareisfraud's picture

Does it make a difference? They're one and the same. "Nationalising" banks (as stupid an idea as "bailing" them out; they should be allowed to simply fail and restructure, come what may, however politically unsavoury this is to ostriches who cannot face reality) is superfluous. If you like saying the banks "own" the government, fine. It's still the government screwing everyone over in the end, be it through banks or however else. What matters is its coercive apparatus that enables it and anyone who hijacks it to do so.

Fri, 05/06/2011 - 16:47 | 1249164 Alex Kintner
Alex Kintner's picture

Hope springs eternal. Of course, it's gonna be tough paying down $150K in student loans on a McHourly wage.

Fri, 05/06/2011 - 19:12 | 1249647 Nathan Muir
Nathan Muir's picture

I can't believe this was junked.  The entire increase is nearly all due to student loans.  The ponzi never stops, pretty sad we've resorted to screwing the youth now...and don't forget, can't BK away student loans kids.

Fri, 05/06/2011 - 21:00 | 1249957 jomama
jomama's picture

not just the youth, the unemployed went back to school, too.

Fri, 05/06/2011 - 16:52 | 1249181 max2205
max2205's picture

Now they are spending what they would have paid on their mortgage AND running up the credit card. I 've seen this movie

Fri, 05/06/2011 - 17:51 | 1249384 Rainman
Rainman's picture

Mortgage bills can be ignored. " Squatter Rent " is a $50 billion giveaway. Make money sitting on your ass at home ......sign me up. This should boost the PI stats.

http://www.bloomberg.com/news/2011-05-06/-squatter-rent-may-boost-spending-as-u-s-mortgage-holders-bail.html

Sat, 05/07/2011 - 11:15 | 1250858 BigSkyBear
BigSkyBear's picture

It's called "Stealth Stimulus" Bitchez!!!!

Fri, 05/06/2011 - 16:50 | 1249184 101 years and c...
101 years and counting's picture

why would the banks lend?  its a losing business.  just take money from the Fed and buy stawks.  perfect trading records for BAC and JPM in Q1 says it all.  they even made money after the japanese EQ....amazing what happens when you have software that ADMITTEDLY is capable of manipulating markets.

Fri, 05/06/2011 - 16:53 | 1249185 chet
chet's picture

It's cool taht commercial banks can make record profits without lending.  You know, what banks do.

Fri, 05/06/2011 - 19:50 | 1249782 Madcow
Madcow's picture

yes - but insider trading is much more profitable 

 

Sat, 05/07/2011 - 06:36 | 1250624 Welfareisfraud
Welfareisfraud's picture

Not that there is anything wrong with insider trading, other than the government's/MSM's imagination.

Fri, 05/06/2011 - 16:51 | 1249192 huckman
huckman's picture

Paging Janet T. & Merideth W.

Fri, 05/06/2011 - 16:52 | 1249193 Jack Mehoff
Jack Mehoff's picture

It's simple really, we privatize the gains and share the losses. For fucks sake, last thing I want is to be a creditor to Joe Redneck. 

Fri, 05/06/2011 - 16:56 | 1249199 Tense INDIAN
Tense INDIAN's picture

The BIG boys never loose...

 

http://markettechnicals-jonak.blogspot.com/

Fri, 05/06/2011 - 16:57 | 1249207 buzzsaw99
buzzsaw99's picture

Axis bank bitchez!

Fri, 05/06/2011 - 16:55 | 1249212 g3h
g3h's picture

Doesn't matter how much the government holds, revolving credit increased.  Period.

It is not from transfer.

Fri, 05/06/2011 - 19:14 | 1249658 Nathan Muir
Nathan Muir's picture

What nonsense you speak.  Of course it matters.  And the effects will be felt by the dear tax payer when those loans default...or perhaps you can explain to me how the hundreds of thousands of kids racking up six figure debt to attend law school or some shit MBA program are ever going to pay those debts back?

Fri, 05/06/2011 - 21:03 | 1249966 g3h
g3h's picture

Student loans are non-revolving.  Different issue.

Fri, 05/06/2011 - 17:08 | 1249252 suckerfishzilla
suckerfishzilla's picture

As a gesture of goodwill don't go paying down anybody's credit cards out of sympathy for them.  They will just use it as an excuse to run up their bill again only this time for better reasons...not.  Some lessons are better learnt the hardway.

Fri, 05/06/2011 - 17:19 | 1249293 Clowns on Acid
Clowns on Acid's picture

Great info Tyler. Your artcile begs the question "Why wouldn't they want to lend if they are borrowing at 0 %, and lending at Prime + 5 - 10%?"

I see it as :

  • The banks credit process has tightened to a riskless level.
  • Most balance sheets are a debt mess. Why lend to a mess.
  • Regulation (Sarb/Ox, Dodd/Frank, hundred other compliance policies) increases their cost of business where they have to increase their lending rates.
  • Therefore the banks rational response is to take the free, and freely printed, Fed $ and play the yield curve or other asset mkts. This does nothing for the real  velocity of money.
  • The US economy cannot experience real growth until it has real increases in the velocity of money.
  • This is the fatal flaw in Helicopter Ben's moonshot theory of QE. Printing money to the banks does nothing for non bank balance sheets. No bank balance sheets have to heal themselves. (Unless Ben will print me and other businesses some $ and credit my account).
  • Therefore - could you please have some of your propellar heads at ZH expand on this equation and then send it to Ben? (forget Timmy G., he is best left playing with feckin Lassie).
  • Real MV = Nominal MV + (GDP - inflation).

Apologies for long post, I gotta get back to the circus. Thanks. 

Fri, 05/06/2011 - 18:47 | 1249578 andybev01
andybev01's picture

I don't understand how the gubmint is the largest lender for auto loans.

I've only bought 4 new cars off of the lot but have never been offered financing from anything resembling a government entity.

What am not understanding?

Fri, 05/06/2011 - 20:58 | 1249948 blunderdog
blunderdog's picture

WHAT!?!?  How do *I* get a US Federale Gummit Visa? Where do I sign up?

No one else will lend me anything, that's for sure.

Sat, 05/07/2011 - 01:22 | 1250464 jkruffin
jkruffin's picture

Look at that first chart! We are exactly right now where we were in July 08 when the collapse began.  This is going to be a disaster forthcoming.

Sat, 05/07/2011 - 08:03 | 1250661 Tater Salad
Tater Salad's picture

If I were a bank, I wouldn't lend the sheeple money either.  Hey, let's go lend at a 3 point spread per year, then get villonized by the gubberment when we have to foreclose or....let's hand this over to our little prop desk here and turn it for a point a day. Boy, that's tough math  to solve now isn't it.

Until consumers start taking responsibility for their actions, there won't be any velocity to the dollars currently being hoarded by the banks. 

 

Sat, 05/07/2011 - 12:36 | 1251066 DavidC
DavidC's picture

"...the government is and continues to be the only major source of credit (primarily for student and car loans)".

Quite.

DavidC

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