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Six Charts To Summarize The NY Fed's Un-Deleveraging Report

Tyler Durden's picture


The NY Fed's quarterly smorgasbord of everything debt-related to the good old American household has little fresh and exciting from the top-down as the nation in aggregate (according to the data) continues to delever - though ever so slightly this time (-0.7% to $11.31tn of total consumer indebtedness) driven mostly by a drop in mortgage indebtnedness (defaults?). However, bottom-up things are a little more interesting; aside from the aforementioned Student Loan debt bubble going 'pop', the glorious states of California, Nevada, New Jersey, and New York each have a little something special for us to focus on as our nation (rightly so) slides uncomfortably down the deleveraging path and along with average collections at record highs, surging auto loans, and jumps in Nevada's new foreclosures, there's a little here for everyone. As Keynesian Yoda might have said, "Deleveraging is the path to the dark side; deleveraging leads to reduced credit demand; reduced credit demand leads to less growth; and less growth leads to suffering," though he might have also added (on the de minimus deleveraging that actually occurred): "size matters not."


Nevada is still flying the flag for most aggressively deleveraging State on a per-capita basis and shows no signs of slowing. New York (on the other hand) does not seem to have felt the need to delever at all...


California tops the charts in housing-related debt (mortgage plus HELOC) per-capita with New Jersey, Nevada, and New York close behind (all notably above the nation's average)...


Nevada though had a little surprise (red oval below) in that its new foreclosures jumped dramatically in the last quarter...


It seems Nevadans are giving up on their homes and their educations - as their per-capita student loans are the lowest among the NY Fed's data - with New York leading the way...


But we are sure it's all fine as the surges in car loans will save the US manufacturing base - while seasonals are obviously at play, it would seem priming the pump of new car demand has required an ever-increasing load of new debt to get us back to the old normal - we will see how all those subprime car loans are doing in 30, 60, and 90 days...


and indeed, the average collection amount per person has almost doubled in the last ten years and shows no signs of stopping...


Full chart pack via NYFed:

Q3 Household Debt and Credit Report

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Tue, 11/27/2012 - 21:48 | 3016161 surf0766
surf0766's picture

Cali, NY, NJ. Dem is blue states. All your debt are belong to you !

Tue, 11/27/2012 - 22:08 | 3016207 cxl9
cxl9's picture

If you believe it is that simple, you have a child's understanding of the problem.

Tue, 11/27/2012 - 22:56 | 3016306 surf0766
surf0766's picture

It is that simple.

Wed, 11/28/2012 - 07:46 | 3016827 LongSoupLine
LongSoupLine's picture

You forgot to add the "sarc" tag...I hope.

Tue, 11/27/2012 - 22:24 | 3016237 TahoeBilly2012
TahoeBilly2012's picture

These are where the smart people are with high paying jobs, they can afford the debt :).

Tue, 11/27/2012 - 22:01 | 3016188 Wakanda
Wakanda's picture

"size matters not."

I've been told otherwise.

Tue, 11/27/2012 - 22:12 | 3016217 Tsunami Wave
Tsunami Wave's picture

I love it when the Tylers release these very highly technical, very deeply explained, filled to the brim with evidence, in your fuckin face to the deniers kind of articles that make any moron that debates me over how amazing debt is red to the face. This is another prime example. Thanks again to you guys for confirming mine (and others around here) suspicions.

Tue, 11/27/2012 - 22:12 | 3016220 woggie
woggie's picture

rampant rot.

Tue, 11/27/2012 - 22:23 | 3016236 Billy Shears
Billy Shears's picture

"Kegger" and Grain alcohol that's how we roll! We got da (s)kool-aid! You wanna a drink?

Tue, 11/27/2012 - 22:25 | 3016240 TahoeBilly2012
TahoeBilly2012's picture

Tyler show the per capita incomes as well, lets see the real ratios of debt over income.

Tue, 11/27/2012 - 22:27 | 3016242 disabledvet
disabledvet's picture

so the only highlight i noticed from today's coverage was the closing of the gold window by the New York Merc. Obviously if we're talking oil "that window never closes" not because every Wall Streeter's wet dream isn't do to so (100 million payout for the team in Connecticut that juiced oil to 140 under W Bush) but because the oil market is so huge i imagine the amount of money to actually play simply isn't available this time around. (a "problem" Alan Greenspan "solved" i might add. along with a few others...like having an economy in the first place.) So what is a poor young speculator to do then? Outside of being a commentarian on ZH i can think of very little. "it's all Government business now" and unless and until they are serious about creating some carry then i think we're just going to have to keep bailing out what's left of the house on the Jersey Shore. yes, yes? (certainly the fiscal cliff will impact Government the hardest...how will be a surprise to everyone. too many variables...not the least of which is there actually is a deal made.)

Tue, 11/27/2012 - 22:34 | 3016258 BlackholeDivestment
BlackholeDivestment's picture

...mmm, Keynisian Yoda, slide down to the dark side says he. Not possible to slide inside the dark side. Mmm, no. 

Tue, 11/27/2012 - 22:48 | 3016291 Iocosus
Iocosus's picture

The Federal Reserve System's charter ends next month, does it not?

Tue, 11/27/2012 - 23:07 | 3016321 q99x2
q99x2's picture

That's right. The Californians are smart as the Greeks. We sit back and collect as much as we can. Keep the flow of money from the stupid Federal BS believing bankster run politicians traveling to us from all over the US. We don't need to work. They work for us while we bask in the warm sunshine and beautiful coastline. Play in the sand with the beautiful women. We don't pay taxes to the Federalists. Then one day comes when they threaten not to pay and we say go ahead who cares we will secede and repudiate our debts. What they going to do. They going to pay that's what their going to do. The best schools, the best woman the best weather and all because we know when we see a bankster what to do with them.

Wed, 11/28/2012 - 00:51 | 3016533 economics9698
economics9698's picture

Darwin at work.

Wed, 11/28/2012 - 00:32 | 3016507 nscholten
nscholten's picture




Wed, 11/28/2012 - 00:33 | 3016508 nscholten
nscholten's picture




Wed, 11/28/2012 - 00:37 | 3016513 pan
pan's picture

That's it!  Money is not important.  Just do what makes you happy!!!!!

 Glad to read you're done!

Wed, 11/28/2012 - 07:15 | 3016794 koaj
koaj's picture

We're number 3!!! We're number 3!!!

Wed, 11/28/2012 - 09:23 | 3016958 Ayr Rand
Ayr Rand's picture

What deleveraging? The latest Z.1 shows the US is now leveraging up in terms of debt / GDP. (2011Q2 to 2012Q2)

Wed, 11/28/2012 - 18:06 | 3018652 peterpalms
peterpalms's picture

Renminbi Relentlessly Replacing U.S. Dollar As Global Reserve Currency


It is no secret that China is replacing the U.S. dollar with its own currency in more and more of its bilateral trading. It’s apparent to all that the Renminbi will soon have (at least) a co-equal status with the dollar as the global “reserve currency”. Yet what is rarely if ever discussed in the mainstream media are the enormous economic repercussions of a world suddenly awash with a massive glut of surplus dollars.

In most respects economics mirrors one of the basic principles of physics: for every action there is an equal-and-opposite reaction. If farmers produce a bumper-crop of wheat and supply soars, then the price falls. Similarly, if (for some reason) the demand for wheat suddenly collapsed, the price would also fall – as both a jump in supply and/or a plunge in demand result in the same state: abundant/excessive supply. And the consequence of excessive supply is always a fall in price.

This economic “physics” applies in an identical manner to the world of currencies…eventually. In a global economy ever more corrupted by serial market-rigging; nowhere is this manipulation more blatant than in the world’s Forex markets. Indeed, the world’s nations have openly declared that they are all competitively engaged in currency-manipulation; as denoted by the euphemistic term competitive devaluation


 (for lack of a better word) “principle” behind competitive devaluation. Through destroying the value of one’s own currency, the wages of workers (in real dollars) are driven steadily toward zero, and so (supposedly) this will allow a nation to under-cut its trade partners and export more goods.

The sick joke here is that with all nations destroying the value of their currencies (and the wages of their workers) simultaneously, no nation gains any “advantage” and the wages of workers are being destroyed for no reason whatsoever. This does, however, produce the paradigm of all currencies simultaneously falling in value, only the rate of decline of this paper-destruction varies.

This is why any time we see some talking-head refer to a currency as “rising in value”, it is an implicit admission that the person has no understanding of the global economy. If two people jump off the roof of a 100-storey building at the same time, and (while on the way down) one individual climbs on top of the shoulders of the other; that person hasn’t “risen”, he will merely go “splat” on the pavement a millisecond later.

The collapse in value of our paper currencies is accomplished through our morally/intellectually bankrupt central banks flooding the world with this (un-backed) paper. In other words, the entire global economy is already drowning in an ocean of these paper currencies. It is thus little surprise that these same central banks are now swapping their own paper for gold at the fastest rate on record.

It is in this context that we see a shift taking place where the U.S. dollar as (current) reserve currency is being steadily replaced by the renminbi. Some numbers here are in order. A recent article in China Daily noted that for much of Asia the renminbi is already the reserve currency.

A “renminbi bloc” has been formed in East Asia, as nations in the region abandon the U.S. dollar and peg their currency to the Chinese yuan…

And now seven out of 10 economies in the region – including South Korea, Indonesia, Malaysia, Singapore and Thailand – track the renminbi more closely than they do the U.S. dollar…

According to the latest report by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, renminbi-denominated trade accounted for 10 percent of China’s total foreign trade in July. The figure was zero just two years ago.

From July 1 to August 31, global payments in the renminbi rose 15.6 percent, according to Swift as payment in other currencies fell 0.9 percent on the average We see three obvious points in the quote above:

1) The move from the dollar to the renminbi is now occurring rapidly.

2) Demand for the U.S. dollar is falling as a direct result of this shift.

3) Even Chinese media are attempting to cover-up the collapse of the dollar.

Notice how there is talk about the demand for “other” (Western) currencies falling by  This is laughable. It’s not (British) pounds that are being dumped in favor of renminbi. It’s not euros that are being dumped. It’s dollars. However, to hide the size of the collapse in demand for the dollar; we see the propaganda machine “average out” the number with other currencies.

Referring again to the inevitable laws of supply and demand (and physics); as demand for the renminbi rises purely as a vehicle for international trade, then its value (relative to other currencies) must also rise as a result of this upward shift in demand. Equally inevitable, as dollar-holders abandon the dollar for the renminbi, an even greater global glut of dollars is created; and the dollar must fall in value (relative to other currencies).

With this economic trend now carved in stone, Americans can rely upon the Federal Reserve – the statutory “guardians” of the U.S. dollar – to shrewdly limit the global supply of dollars, in order to delay the complete/final collapse of the dollar as long as possible. Right?

Wrong. As sophisticated readers already know, the Federal Reserve recently announced a gratuitous, “open-ended”, additional money-printing program of approximately $500 billion/year. This massive infusion of yet more dollars into the global economy is all dedicated to buying the worst financial feces from the balance sheets of the Wall Street crime syndicate.

Think of the U.S. dollar as the Titanic. Instead of trying to patch-up the Titanic as it began to sink to the bottom of the ocean, we have the Federal Reserve dynamiting more holes in the hull.

Readers need to fully grasp the three trends which are all rapidly/simultaneously destroying the value of the U.S. dollar:

a) Exponentially increasing U.S. deficits are requiring exponentially increasing money-printing as all this new dollar-denominated debt is issued. This alone must result in hyperinflation, the only question being when.

b) The switch from the dollar to the renminbi must result (sooner or later) in a panic-flight out of the dollar – and also U.S. hyperinflation.

c) Gratuitous money-printing from the Federal Reserve to the Wall Street crime syndicate now exceeds $1 trillion per year in 0% “loans” and simple hand-outs.

Out of the three trends above, the only one which is not entirely self-explanatory is “b”. The move from the dollar to the renminbi must become a stampede, precisely because of the economic parameters previously outlined.

The U.S. and nearly all of the West are dying economies. Permanent near-zero interest rates, and the suicidal insanity of “competitive devaluation” proclaim this to the world. Gigantic, unsustainable deficits make debt default merely a formality now for nearly all Western nations. Thus in a world of crumbling (paper) currencies the West’s paper must collapse faster.

This, in turn, must result in one of the most basic forms of human behavior in markets: the desire to flee assets falling in value (Western paper currencies), and gravitate toward what is rising in value (in relative terms): the renminbi. As this herd-behavior steadily builds, a stampede is inevitable.

The global economy is now telegraphing a message for any/all with the sense to pay heed to

Fri, 12/07/2012 - 23:29 | 3044856 cgagw
cgagw's picture

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