Guest Post: Consumer Debt - Still A Long Way To Go

Tyler Durden's picture

Via Lance Roberts of Street Talk Live,

Consumer Debt - Still A Long Way To Go

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Cognitive Dissonance's picture

I'm bailing (out TBTF) as fast as I can Captain Ben. Full speed ahead, damn the fiat.

<Banksters and corporations first to the lifeboats.>


Ruffcut's picture

My 25 year old engineer son. Money in the bank, no student loans, paid off suburu turbo hot rod and still lives at home.

Lucky fucking me. Handled debt and why am I so miffed?

grid-b-gone's picture

I could have posted this same comment. Not miffed, though - he's paying room and board.

ghost trader's picture

Current Status: 26 year old accountant. Bankrolling stacks, paid off 25k student loans, finance new car at 1.99apr, and still live free at home.

+Mom still loves me. 

Buzzworthy's picture

Some say this situation is being done on purpose.

bobthehorse's picture

I'm a firm believer in the American way.

Get all the credit cards you can lay your hands on.

Run them up to their max.

Then don't pay.

Just spend 500 bucks for a bankruptcy lawyer.

Now that's living! 

Whoever wrote this article is an unpatriotic son-of-a-bitch.

RSBriggs's picture

The only problem with this idea is that credit card debt is generally not dischargeable in a bankruptcy any more, especially if you have made purchases on the card within the six months prior to declaring bankruptcy.  You can thankk the the bankers for getting that piece of bankruptcy reform legislation passed....

PUD's picture

But the mandate from the top is to de-lever so that you can re-lever. Pay down that pesky debt so you can borrow to consume and thus save the economy!

Hohum's picture

"Growth" should be measured as GDP/total credit market debt.  Of course, it won't be because it would be revealed that growth is a thing of the past.

However, perhaps massive tax cuts will revive "growth."  Yeah, right.

BraveSirRobin's picture

The strange part is the public complains about federal debt, when they are even more in hock than their benevolent and generous Uncle Sam.

mazanda's picture

One of the best articles I have seen on the subject, clearly bringing together all relevant facts and data. Thanks!

Omen IV's picture

really you believe this ?

you believe that"personal" per capita debt is over $700,000 = "real household debt per capita" which  would not include the national debt "not personally liable" - -------->impossible !!!!

Seer's picture

Did you not get the accounting memo that said that we're all messing with virtual numbers?

Tsar Pointless's picture

Not a long way to go for consumer credit outstanding to hit a new record high. We're there already.


WASHINGTON—Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.

The Federal Reserve says consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.

Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.

The strong rise in borrowing came in a month when American cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.

Read more: US consumer borrowing rises to record $2.75T - The Denver Post
Read The Denver Post's Terms of Use of its content:


And there you have it. Superstorm Sandy damaged October consumer spending, though it didn't impact the USofA until the final two days of the month.

Now, let's get ready for some football!

GMadScientist's picture

Because people with plastic won't starve until you take away their plastic.


Quinvarius's picture

Looks like we have to print up some more GDP.

r101958's picture

Now you need to compare the fall in household debt to GDP to the rise in Govt debt to GDP and you will then know what is propping up the system.

Tombstone's picture

What makes no sense to me is that after this delevering is about complete, is the consumer expected to go out and spend like a hog just to keep Benny's false economy from blowing up?  Perhaps, since the only way to keep this house of cards from falling down is for government to keep on spending and increasing the debt. 

asteroids's picture

Deleveraing, HAH! You forget demographics. The bulk of the population is broke, with no or very little saved for retirement. Those that do have any savings are going into capital preservation mode. They want nothing to do with debt. Expect  that curve to shoot to the downside within the next 5 years or so.

WhiteNight123129's picture

The Trend is a fallacy, there is no trend in 1933 consumer peaked and deleveraging was done between 1933 and 1950, by that measure deleveraging has to go all the way down to 1950 and probably lower as those moves tend to reserve.


PLus CHina internationalizing the Yuan and not increasing debt to GDP will make the ~up~ trend impossible. FAIL DB.


WhiteNight123129's picture

The Author should not discard bankruptcies and hyperinflation as a way to delever. Those are very potent remedies to get rid of the debt.


WhiteNight123129's picture

Short the Treasuries. No brainer.


Shorting the treasuries is like buying Gold in 1999.

neutrinoman's picture

Yes. Short the Fed, which will lose control of the yield curve some time between late 2013 and early 2015. The next "backs-to-the-wall" moment.

Watch what happens to rates and bond prices during the next stock market correction. They won't go down / up much. That will be the first sign of things to come. Think of bonds in terms of prices and bubbles, not in terms of rates. Inflation in the bond market is reflected in bond prices and *low* rates.

neutrinoman's picture

The whole "trend line" argument is bogus. Deleveraging isn't complete until the trend is *broken*. It's the *level* that matters.

The leverage level has to drop to below 60-70%, which is where it was in the 80s and much of the 90s -- drop at least that far, if not farther. Same with savings rate -- needs to rise to at least 6-8%, where it was during the same period.