The United States Of Debt: Total Debt In America Hits A New Record High Of Nearly 60 Trillion DollarsSubmitted by Tyler Durden on 06/17/2014 21:22 -0400
What would you say if we told you that Americans are nearly 60 trillion dollars in debt? Well, it is true. When you total up all forms of debt including government debt, business debt, mortgage debt and consumer debt, we are 59.4 trillion dollars in debt. 2008 should have been a major wake up call that resulted in massive changes. But instead, our leaders just patched up the old system and reinflated the old bubbles so that they are now even larger than they were before. They assure us that they know exactly what they are doing and that everything will be just fine. Unfortunately, they are dead wrong.
When looking at residential real estate, we often tend to focus almost solely on recent price movements in assessing the health of the housing market at any point in time. But as both homeowners and income-earners in the larger economy, of which the housing market is an important component, to really understand what's going on, we need clarity into the larger cycle driving those price movements. The more we look at today's data, the more it looks like that we are in a new type of pricing cycle -- one that homeowners and housing investors have no prior experience with. And the more we learn about the fundamentals underlying the current cycle, the harder it becomes to justify today's home prices on any sustained level. Meaning a downward reversion in home values is very probable in the coming years.
If you make more than $27,520 a year at your job, you are doing better than half the country is. But of course $27,520 a year will not allow you to live "the American Dream" in this day and age. After taxes, that breaks down to a good bit less than $2,000 a month. You can't realistically pay a mortgage, make a car payment, afford health insurance and provide food, clothing and everything else your family needs for that much money. That is one of the reasons why both parents are working in most families today. The American Dream is becoming a mirage for most people. No matter how hard they try, they just can't seem to achieve it. And here are some hard numbers to back that assertion up. The following are 15 more signs that the middle class is dying...
One of the things that this era of American history will be known for is conspicuous consumption. Even though many of us won't admit it, the truth is that almost all of us want a nice vehicle and a large home. They say that "everything is bigger in Texas", but the same could be said for the entire nation as a whole. We live in a debt-based system which is incredibly fragile. We experienced this firsthand during the last financial crisis. But we just can't help ourselves. We have always got to have more...
The US trade balance collapsed in April dashing hopes for the exuberant hockey-stock rebound in Q2 GDP. This is the biggest trade deficit since April 2012 and the biggest miss from expectations since October 2008. The last 2 months have seen the biggest slide in the deficit in a year as trade gaps with the European Union and South Korea reach records and the deficit with China surged by $7billion to $28 billion. Impots of capital goods, autos, and consumer goods all set records. And Q2 GDP downgrades in 3...2...1...
There was a small ray of hope just after the Lehman collapse that one of the most deplorable characteristics of US society - the relentless urge to build massive McMansions (funding questions aside) - was fading. Alas, as the Census Bureau today confirmed, that normalization in the innate desire for bigger, bigger, bigger not only did not go away but is now back with a bang. According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.
Iif there is to be a real housing recovery, households have to be formed at a much faster pace. Alas, in recent years household formation has not made a "combeack", it has crashed. In fact, according to Census Bureau data, in Q1 the number of households formed each month was 189,000, down from 1,563,000 in 2013, dropping more or less in a straight line since the article's publication!
"The DEA doesn’t want the drug war to end,” said Nelson, when asked about a possible connection between the agency’s hatred of legal pot and its buddies in Sinaloa. “If it ends, they don’t get their toys and their budgets. Once it ends, they aren’t going to have the kind of influence in foreign government. I’m not a conspiracy theorist, but where there’s smoke there’s probably fire.”
“We’ve spent 1.3 trillion since 1972 on the drug war. What have we gotten for that? Drugs are cheaper and easier to get than ever before,”
However, the Mexican drug cartels have been bailed out by America’s drug warriors who have cracked down on prescription pain killers.
"Blessed are the young, for they shall inherit the National Debt." - Herbert Hoover
The roll off of the massive slice of the population known as "baby boomers" in the years ahead will have a significant and profound impact on the economy and the markets. In my opinion, there is simply not enough attention paid this issue and it is an important one. However, since demographic impacts take a very long time to mature, they are ignored by the mainstream media which are focused on the 24-hour news and market cycles.
Regardless of which side of the low labor force participation rate argument you stand on, it is hard to argue that it is simply a function of retiring "baby boomers." While political arguments are great for debate, it is the economics that ultimately drive employment. While the Fed has inflated asset prices to the satisfaction of Wall Street, it has done little for the middle class. It is ultimately fiscal policy that will help business create employment, the problem is that businesses need less of it while government officials keep piling on more. In the meantime, stop blaming "baby boomers" for not retiring - they simply can't afford to.
And just like that Q1 GDP may have turned even more negative, after the March trade deficit ended up being worse than the $40.0 billion expected, printing at $40.4 billion. However, the one offset may be that the February deficit was revised from $42.3 billion to $41.9 billion, in effect being a wash to the Q1 GDP number, which as most already know, is set to be -0.4% at the first revision. Among the reasons for the (smaller than expected) decline in the deficit was a "decrease in imports of services mainly accounted for by a decrease in royalties and license fees, which in February included payments for the rights to broadcast the 2014 Winter Olympic Games." For once (not so) harsh weather (in USSR 2.0) was a boost to the economy.
The "middle class" has atrophied into the 10% of households just below the top 10%. The truth is painfully obvious: a middle class lifestyle is unaffordable to all but the top 20%. This reality is destabilizing to the current arrangement, i.e. debt-based consumerism a.k.a. neofeudal state-cartel capitalism, so it is actively suppressed by the officially sanctioned narrative: that middle class status is attainable by almost every household with two earners (a mere $50,000 annual household income makes one middle class) and middle class wealth is increasing.
Simply put, there is overwhelming evidence of inflation during the decade long era in which the central bankers have been braying about “deflation”. What is more worrisome, David Stockman presents some startling evidence of the complicity of the government statistical mills in using the inflation that is not seen (i.e. “imputed”) to dilute and obscure the inflation that is seen (i.e. utility bills).
The US non-recovery summarized in a nutshell: nobody can afford to buy anymore, so everyone is forced to rent. The result: homeownership rate plunging to 19 year lows, while median asking rents just soared to a new all time high. Thank you Ben Bernanke for the "New Normal American Dream."
The similarities between 2007 and 2014 continue to pile up. And you know what they say - if we do not learn from history we are doomed to repeat it. Just like seven years ago, the stock market has soared to all-time high after all-time high. Just like seven years ago, the authorities are telling us that there is nothing to worry about. Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.