As the following chart shows, after langushing between $70 and $800 billion in the second half of the last decade, since Q2 2010 US auto loans have been on an absolute tear, and have increased by over 40% in the past five years alone, to just shy of $1 trillion as of June 30!
This Is "Getting Really Ugly, Really Fast": Two Thirds Of Recent Graduates Say US College Education Is A RipoffSubmitted by Tyler Durden on 09/29/2015 18:20 -0400
"When you look at recent graduates with student loans it gets really ugly, really fast. If alumni don’t feel they’re getting their money’s worth, we risk this tidal wave of demand for higher education crashing down."
When risk sold off last week in the wake of the Fed’s so-called “clean relent,” it signalled at best a policy mistake and at worst the loss of any and all credibility. Tonight, Yellen gets a do-over.
The consequences of all this are grim, but the timing is hard to predict. Perhaps the government can somehow borrow amounts that no one previously thought possible. But its creditors will look for repayment. Either the creditors are going to walk away unhappy (in the case of default), or the holders of all dollars are going to be stuck with worthless paper (in the case of hyperinflation), or the taxpayers’ pockets will be looted (the longer things muddle along), or most likely a combination of all three will happen. This will not be a happy story for all but a few of us.
The world is becoming increasingly chaotic and the American people are seeking a leader who can bring order, make tough decisions, and capture the zeitgeist of this moment in history. They are in search of a prophet generation (Boomer) Grey Champion, whose arrival marks the moment of darkness, adversity and peril as the Fourth Turning careens towards its climax. The Grey Champion doesn’t necessarily have to be a good person, but they must lead and display tremendous confidence in their cause and path. Franklin, Lincoln, and FDR have many detractors, but during their Fourth Turnings, they most certainly led, casting aside obstacles (sometimes illegally) and enduring dark days and bleak prospects for success. Is there someone of that stature ready to lead the American people now?
The 2008 global financial crisis was centered on mortgage debt. There was too much of it that couldn’t be repaid. When the value of the collateral – homes – headed down, the bubble popped. Today, consumers have about the same amount of debt. But now the excesses are in auto loans and student debt... and again, the collateral is falling in value.
As we have noted numerous times in the past, there is a Bull market in serfdom. America's Renter Nation has never spent more of its paycheck on rent and as Zumper notes, with rent prices in San Francisco and New York at the highest in the nation, affordability does not seem to exist in these two metropolitan areas. For some idea of the scale, there are actually castles in France and Italy that can be rented for about the same price as average apartments in these cities...
The chart below warrants the question: if an even modest slowdown in Europe's pace of credit creation resulted in unprecedented economic and social upheavals for the "southern" part of the continent, what happens when deleveraging finally hits one of the other places around the globe, be it the BRICs in particular, the EMs in general, or - heaven forbid - the US itself.
With every passing week that money markets rates remain pinned to the zero bound by the Fed, the magnitude of the financial catastrophe hurtling toward main street America intensifies. When the next financial bubble crashes it can only be hoped that this time the people will grab their torches and pitchforks. Stanley Fischer ought to be among the first tarred and feathered for the calamity that he has so arrogantly helped enable.
The private economy and its millions of savers exist for the convenience of the apparatchiks who run the central bank. In their palpable fear and unrelieved arrogance, would they now throw millions of already ruined retirees and savers completely under the bus? Yes they would.
Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? We think it is something much worse...
It's a case of economic policy run amuck. Real estate development can boost the economy, under the right conditions: lots of jobs and economic activity get generated when homes are built or refurbished. And there is the wealth effect when home prices rise. But when taken to extremes - as it is today and was in the previous economic cycle consumer spending gets squeezed out in order to pay mortgages and rent. It becomes an incredibly unproductive use of capital. Simply put, we have a surge in college-age prostitution and it's the Fed's fault. It gives new meaning to the term "perverse monetary policies"
Want further evidence of the misappropriation of taxpayer funds to post-secondary education? Look no further than the Pell grant program.
As the capital markets from Shanghai to New York were melting down in ways hearkening back to the early days of the prior financial crisis - a period of time many would like to forget (or act) as if it never happened - the Nobel Laureate economist Paul Krugman decided it was time once again to weigh in with what will surely be viewed by the so-called “smart crowd” as a brilliant perspective on what ails the world: Not enough debt. He came out blazing with what seems the only bullet in his arsenal as a cure-all for what ever the ailment might be (e.g., debt.) as he argues this view in his latest: Debt Is Good.
How bad is America's $1.3 trillion student loan problem, you ask? As WSJ reports, "nearly seven million Americans have gone at least a year without making a payment on their federal student loans, a staggering level of default that highlights how student debt continues to burden households despite an improving labor market."