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Federal Government Injects Near Record Amount In Student Loans In January As Consumer Credit Rises

Tyler Durden's picture




 

Minutes ago the January Consumer Credit report was released. It was expected to post an increase of $14.7 billion. Instead it rose by $16.2 billion. On the surface this would be great: consumers are spending more, levering up confident in the future, etc, etc. Alas, as always in the New Normal, the story was below the surface. Specifically, of the $16.2 billion rise, a tiny $106 million was due to revolving, or discretionary spending credit card, debt. The balance, or 99% of the total, was non-revolving debt, best known as student loans, and less known as GM NINJA car loans. And here is the scary math: in the past 12 months, of the $153 billion in total consumer credit increase, just $6.4 billion was in revolving credit. The balance: student and car loans.

And where it gets even worse is breaking down the sources of credit. Because not only is the Fed supposed to monetize virtually all the US debt with a positive duration, it also has no choice but to directly fund the consumer debt.

Sure enough, in January, the biggest by far source of debt, was the Federal Government, which funded some $26 billion of new student and car loan, which as everyone knows, will never be repaid. 

This was the fifth highest US government consumer credit injection in history.

The math again: of the $153 billion in total debt sources in the past 12 months, 70% has been handed over by the Federal Government.

Source: G.19

 

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Thu, 03/07/2013 - 16:57 | 3309954 lolmao500
lolmao500's picture

Yet again the new generation is getting financially raped. College bubble anyone?

Thu, 03/07/2013 - 17:30 | 3310101 max2205
max2205's picture

they are rookies compared to Ben Almighty

Thu, 03/07/2013 - 17:55 | 3310205 Manthong
Manthong's picture

So next time somebody asks you how does Bernanke Fed Fiat get into the wider economy..

it ain't Obama printing it in the basement of the White House.. he's borrowing it from Ben, buying cars and indenturing youngsters. 

Thu, 03/07/2013 - 17:56 | 3310221 bobola
bobola's picture

Better student loans and car loans than high interest credit card debt... 

Thu, 03/07/2013 - 18:45 | 3310407 SunRise
SunRise's picture

Negative - Unseen costs are weaving Black Holes with such imaginary consolation.

Thu, 03/07/2013 - 17:31 | 3310106 negative rates
negative rates's picture

Why buy a used car when you wreck a new one?

Thu, 03/07/2013 - 16:58 | 3309958 Getting Old Sucks
Getting Old Sucks's picture

Where do I sign up for this Government Car Loan?  That's the only way I'm buying a new car.  They're so fucked up, I'll drive it five years before they come get it.

Thu, 03/07/2013 - 16:57 | 3309959 Bunga Bunga
Bunga Bunga's picture

Even in my weirdest dreams I never saw the USA transforming into a central planning economy.

Thu, 03/07/2013 - 17:01 | 3309977 Sockeye
Sockeye's picture

Where have you been since Dec 23, 1913?

Thu, 03/07/2013 - 17:31 | 3310105 Canadian Dirtlump
Canadian Dirtlump's picture

He just hasn't dreamt since then. Everyone gets tired of nightmares. Myself included.

Thu, 03/07/2013 - 17:57 | 3310226 Manthong
Manthong's picture

So when is the big bash for the Fed?

Certainly we will be having a huge centennial celebration in honor of all that the Federal Reserve Act and bank has done for us, won’t we ?

Thu, 03/07/2013 - 18:47 | 3310421 SunRise
SunRise's picture

Where have I been since 1913?  Well . . . mostly latent in the gene pool.

Thu, 03/07/2013 - 17:07 | 3309995 McMolotov
McMolotov's picture

The Soviet States of America. This won't end well.

Even in my wierdest dreams I never saw myself wanting to leave this country, but I do now, and I don't think there's anywhere else to go that hasn't been tainted by the same disease.

Plus I'm not nearly wealthy enough to do it. I'm not Simon Black, International Man of Mystery.

Thu, 03/07/2013 - 18:08 | 3310206 Spastica Rex
Spastica Rex's picture

I used to want to go to New Zealand and live a simpler life. Better now to just hang out in the Wallowa Mountains in Oregon.

There's no place left - this is the New World Order.

Thu, 03/07/2013 - 20:06 | 3310640 TBT or not TBT
TBT or not TBT's picture

Capital controls will find you, and if they don't skynet will.

Thu, 03/07/2013 - 17:02 | 3309978 TruthInSunshine
TruthInSunshine's picture

Der's neber ben a bedder time 2 go2Kollage!

I am a P-henix-an.

Thu, 03/07/2013 - 17:20 | 3310062 McMolotov
McMolotov's picture

I like when the Phoenix University commercial is on right after the Forever Lazy commercial. Kinda says it all.

Thu, 03/07/2013 - 17:27 | 3310076 TruthInSunshine
TruthInSunshine's picture

Id wuz eeder uNiverZity of P henix, Tom Vu or Tom Vu II.

Derp a Derp.

Thu, 03/07/2013 - 17:02 | 3309982 q99x2
q99x2's picture

I know I can get a car with a student loan but I want a house.

Thu, 03/07/2013 - 17:04 | 3309991 Seasmoke
Seasmoke's picture

You just need Life Insurance for the house

Thu, 03/07/2013 - 18:48 | 3310426 SunRise
SunRise's picture

No problem:  Your car will soon be your house!

Thu, 03/07/2013 - 17:02 | 3309985 Fix It Again Timmy
Fix It Again Timmy's picture

Holy shitttttt, Batman!...........

Thu, 03/07/2013 - 17:03 | 3309986 Seasmoke
Seasmoke's picture

i sure would not want to be 22YO again

Thu, 03/07/2013 - 17:08 | 3310006 McMolotov
McMolotov's picture

If you're 65 and older, you can look forward to death. If you're under 65, you can't really look forward to anything.

Thu, 03/07/2013 - 17:35 | 3310125 negative rates
negative rates's picture

I guess that's too bad for you then ain't it?

Thu, 03/07/2013 - 17:03 | 3309988 Jason T
Jason T's picture

shit i really thought we were getting back to borrowing again.. it's all FEDeral governemnt...  centrally planned alright.

 

poor kids... led to temptation and their debts won't be forgiven.

Thu, 03/07/2013 - 17:21 | 3310066 Shizzmoney
Shizzmoney's picture

led to temptation and their debts won't be forgiven.

What if the people killed all of the banksters?

Nothing said "debt paid" like a creditor 6 feet under.

Thu, 03/07/2013 - 18:51 | 3310437 Jason T
Jason T's picture

what has been, will be again, there is nothing new under the sun .. so said someone in the bible who's name I can't spell

Thu, 03/07/2013 - 17:04 | 3309993 101 years and c...
101 years and counting's picture

who cares? debt is debt and debt is good.  pile it on, baby.  when it blows, it means ben gets to print even more money.  which is probably his goal.

Thu, 03/07/2013 - 17:15 | 3310039 Getting Old Sucks
Getting Old Sucks's picture

As Chuck Shumer said "Do your job Ben", I believe it's the government goal for him to print.  No way they can pay off the debt without today's dollar equalling a dime.  Pretty soon the homeless will carry around a tin can that says "minimum donation $100 please".

Thu, 03/07/2013 - 17:06 | 3309996 Shizzmoney
Shizzmoney's picture

I don't blame people for going back to school, and getting loans for it. 

That's what the MSM and Corporation tell them to do: get a degree, and you will be hired. 

"Submit to serfdom, sign here" - that's the corporate propaganda line.

Of course, these suckers are getting cold decked for the most part. 

Thu, 03/07/2013 - 17:18 | 3310050 infinity8
infinity8's picture

I live in a college town and eavesdropping is a favorite passtime for me. They're all going to grad school, whether or not they were planning to originally because they are being told they have to to get a job. Which turns out to be true most of the time for the one's who tried to get a job with a 4-yr. What pisses me off is what these kids are being led to believe they will get paid with any degree - crazy numbers for degrees in French or Psychology. Another thing I learned lately (and I don't know if it applies to all grad school loan $$) but one gal told me that her grad school loans start accruing interest as soon as she receives the money, no deferrment and of course she didn't know at what rate - "I don't really want to know". Yikes.

Thu, 03/07/2013 - 17:32 | 3310089 Cognitive Dissonance
Cognitive Dissonance's picture

"......but one gal told me that her grad school loans start accruing interest as soon as she receives the money, no deferrment and of course she didn't know at what rate - "I don't really want to know". Yikes."

In the interest of national security her interest rate is on a need to know basis. And she most certainly doesn't need to know.

Sincerely,

Eric H. Holder, Jr

The Attorney General

Bananamerica

Thu, 03/07/2013 - 17:47 | 3310180 BandGap
BandGap's picture

Yes, one type of loan has intrerest accruing the minute they hand you the check. No deferment. Bend over.

 

Thu, 03/07/2013 - 20:03 | 3310630 TBT or not TBT
TBT or not TBT's picture

Lots of fools going for "-Studies", which indicates the pondering of something tendentious and vague taught by leftists, generally. I ran into a day in the park the other day who was going for one of those, the job market being soft right now you know. She'd of course graduate into a hiring boom to match the depths of the bust.

Thu, 03/07/2013 - 17:09 | 3309997 Cognitive Dissonance
Cognitive Dissonance's picture

The trifecta is when a student not only gets moar student loans, but a new car and three new credit cards to boot.

#Winning

<God bless Bananamerica>

Thu, 03/07/2013 - 17:36 | 3310135 TBT or not TBT
TBT or not TBT's picture

This is called crossing the streams, in ghostbusters parlance.

Thu, 03/07/2013 - 17:06 | 3309999 Winston Churchill
Winston Churchill's picture

Three Bubbles in one blow,

Zimbabwe Ben is the beast at what he does.

Thu, 03/07/2013 - 17:17 | 3310046 realtick
Thu, 03/07/2013 - 17:34 | 3310120 TBT or not TBT
TBT or not TBT's picture

Gotta help the UAW and university employee constituencies, plus feed the Hope of youth voters. That's the way the left rolls.

Thu, 03/07/2013 - 17:39 | 3310152 youngman
youngman's picture

And its what they are buying with these student loans......not all of it is going to some professor....its play money too....and I bet 40% of them are scam loans......NSNC..no school no class loans....just the application that says Minority applicant and shazamm..you get a loan.....they are all planning on Obama wiping the slate clean at some point..because an education is a right and should be free to a leftist...I expect Obama to do this in his last year....

Thu, 03/07/2013 - 19:58 | 3310613 TBT or not TBT
TBT or not TBT's picture

It's "free" in Europe, and Europe is worshipped by the left for free stuff.

Thu, 03/07/2013 - 20:23 | 3310672 Sokhmate
Sokhmate's picture

I know of a person who used his/her student loan for a Hawaiian vacation.

Thu, 03/07/2013 - 23:17 | 3311059 Northern Lights
Northern Lights's picture

I know one guy who back in 1995 went out and bought a Ford Probe sportscar!  He had plenty left over for tuition as the loan was in excess of $20,000 and he'd just get another the next year.  Problem is, shortly after we graduated he owed something like $60,000.  I feel out of touch with him so I never did hear what happened to that loan.

Thu, 03/07/2013 - 17:51 | 3310198 NoWayJose
NoWayJose's picture

I can easily see the day when our gubmint forgives student loans for those with low incomes.

Thu, 03/07/2013 - 17:59 | 3310235 Z'
Z&#039;'s picture

There are student loan forgiveness programs already in place for various government employees.  Advice now being given to graduates unable to meet student loan debt obligations is to go and get a govt job and work there for the term required to get the debt forgiveness.

Thu, 03/07/2013 - 19:59 | 3310615 TBT or not TBT
TBT or not TBT's picture

Govt jobs are forever, not temporary.

Thu, 03/07/2013 - 21:25 | 3310827 Trucker Glock
Trucker Glock's picture

the job isn't really forever.  at some point the fat pension kicks in.  the bill to the taxpayer is forever.

Thu, 03/07/2013 - 18:01 | 3310240 SelfGov
SelfGov's picture

Between this and tax rebates we've found the source of January's increased consumer spending!

Thu, 03/07/2013 - 18:14 | 3310301 Village Smithy
Village Smithy's picture

Student loan debt has become its own TBTF. The Debts will be forgiven, you know, because if they aren't it could hurt the economy.

Thu, 03/07/2013 - 19:04 | 3310476 venturen
venturen's picture

It won't hurt the economy...it would hurt a banker and we can't have that!

Thu, 03/07/2013 - 21:20 | 3310813 Catullus
Catullus's picture

They'll never be forgiven. It's money owed to the federal government. They won't let you default on them. Repayment will be based on income, otherwise known as income tax surcharge.

It's the stealth way of raising taxes. And the best part, the loan guarantees don't hit the debt ceiling balance.

Thu, 03/07/2013 - 18:23 | 3310338 dolph9
dolph9's picture

These debts are not going to get repaid.  They will be defaulted on or inflated away.

The currencies are getting destroyed right in front of your eyes.  But for now there's not much we can do but observe, document, and protect ourselves.

This is the system in which we live, meaningless electrodollars floating all over the place.

Thu, 03/07/2013 - 23:44 | 3311122 sm0k4
sm0k4's picture

Nonsense. People will just be on a deferment paying off interest and nothing toward the principle until they die.

Fri, 03/08/2013 - 04:37 | 3311391 Notarocketscientist
Notarocketscientist's picture

Students are only following the TBTF banks - the rot is through the entire society - everyone is milking it.  Because they know they will never have to pay the money back.  So might as well LIVE LARGE

Fri, 03/08/2013 - 06:31 | 3311451 highwaytoserfdom
highwaytoserfdom's picture

Need to revert to the old bankrupcy laws or this is just a reworked TARP style bailout of the banks.

Sat, 03/09/2013 - 22:17 | 3316160 rjs
rjs's picture

computed that student debt was increasing at an annual rate of 73% in January...

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