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Student And Car Loans Account For 102% Of All New February Consumer Credit

Tyler Durden's picture




 

Another month down, another month in which US consumers deleveraged by paying down their credit cards. Although that is not exactly correct: as we showed recently, the New Normal source of credit has nothing to do with revolving debt, or credit cards, or any other old normal notions, and everything to do with student debt, which is used for everything except paying for tuition. That, and car loans of course. Sure enough, in February, of the $13.7 billion in new loans created, $13.9 billion, or 102% of all, was there to fund student and car loans.

 

And looking further back at the data over the past year, of the $172 billion in new consumer debt, a stunning 96% has gone to new student and car loans.

 

So there it is in a nutshell: the deleveraging consumer continues to delever, except when it comes to purchasing Government Motors cars courtesy of government subprime NINJA loans, and of course, student loans, which as we profiled recently, are never getting repaid, and will be yet another taxpayer-funded bail out in a few short years.

 

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Fri, 03/07/2014 - 16:19 | 4522591 AmericasCicero
AmericasCicero's picture

But what would I do without my History of Indonesian Basket Weaving degree?

Fri, 03/07/2014 - 16:35 | 4522671 foodstampbarry
foodstampbarry's picture

Hey, it could come in handy when you're flipping steaks at Outback... It could.

 

... probably not.

Fri, 03/07/2014 - 16:23 | 4522598 LawsofPhysics
LawsofPhysics's picture

"Winning" - that's a lots of debt slaves.

Remember folks, private equity didn't build the pyramids, slaves did.

Fri, 03/07/2014 - 16:26 | 4522627 TruthInSunshine
TruthInSunshine's picture

Government = the bagman that is instructed to rape the taxpayers for the benefit of the CronyCapitalists

Long Live USSA!!!

Fri, 03/07/2014 - 17:16 | 4522863 KnightTakesKing
KnightTakesKing's picture

In case you missed it. The world has now gone full retard:

ACCRA, Ghana—A rising U.S. dollar has stirred many pastors here into nightly prayers for their fallen currency to rise again.

"I command the resurrection of the cedi! In the name of Jesus!" preached evangelist Nicholas Duncan-Williams of a megachurch called Action Chapel, recently. Then he addressed Satan: "Take your hands off the central bank!"

http://online.wsj.com/news/articles/SB1000142405270230458500457941782204...

Fri, 03/07/2014 - 22:53 | 4523937 PT
PT's picture

"Crony capitalism" Or "begging" with more elaborate props?  ( Then again, forget it.  They write the legislation, they get the laws changed, their people go in and out of govt, they essentially "beg to themselves". )

"You must lend money to idiots so they can afford to buy shit."
"Oh dear, I accidentally made a profit.  Not my fault.  I must have done something good."
"Oh noes, the idiots cannot afford to repay their loans.  Whocouldaknowed?"
"You must give me money so I can lend more money to idiots so they can buy shit."
"If you don't give me money then the idiots can't borrow it and they won't be able to buy shit and it will all be your fault ..."

Oh yeah, how did we end up equating "debt" with "affordable"? 

Fri, 03/07/2014 - 16:22 | 4522606 cougar_w
cougar_w's picture

Getting a student loan is what you do now when your unemployment benefits expire.

IIRC you cannot default on student loans. The only way out is suicide. So most of these people are only buying a few years.

Sad, but that's the kind of nation we have become.

Fri, 03/07/2014 - 16:31 | 4522651 Tsar Pointless
Tsar Pointless's picture

And it began in the 1980s, when Saint Ronnie Raygun gave the corportions everything they had ever wanted, and then some.

Since then, we've just been waiting for the last shoe to drop, the band to stop playing, and the lights to go out.

Fri, 03/07/2014 - 17:07 | 4522822 Gringo Viejo
Gringo Viejo's picture

Good to know the recovery has such firm footing.

Fri, 03/07/2014 - 16:36 | 4522680 pitz
pitz's picture

Suicide or ex-patriation.  Sooner or later they'll have to build a fence to prevent the exodus.  Didn't Ron Paul say something about the fences possibly being used in the future to keep people in America, as opposed to keeping the Mexicans and the Canadians out?

Fri, 03/07/2014 - 16:38 | 4522695 Tsar Pointless
Tsar Pointless's picture

Well, to answer your question, much like a lot of college students these days, fences do go both ways.

They can keep people out, and they can keep people in.

I think the old adage "Be careful for what you wish, you just might get it" may apply to those who champion a fully-closed border around our nation.

Fri, 03/07/2014 - 16:36 | 4522682 Chief Wonder Bread
Chief Wonder Bread's picture

-- IIRC you cannot default on student loans.

That's deflationary.

Until it becomes inflationary when CONgress changes the law to taxpayer-funded debt forgiveness on student loans. (which they'll have to do in order to prevent tragedy of massive 'student' suicide death.) /s

The can-kicking continues until morale improves.

Fri, 03/07/2014 - 17:40 | 4522968 alangreedspank
alangreedspank's picture

That's the other way around IMO. If a debt cannot be defaulted on, then it can't be deflationary.

Fri, 03/07/2014 - 19:39 | 4523345 Chief Wonder Bread
Chief Wonder Bread's picture

At the point when debt is initially created, that is inflationary. (can-kicking, as we continue to see happening at present.)

While it remains on the books and is being discharged through normal repayment, it has no further effect

UNLESS...

it can't be defaulted on by the borrower during times of zero job growth and little to no income growth, in which case it becomes deflationary during its repayment because such repayment replaces consumer spending which would otherwise result.

Bottom line, the inability to discharge the debt through default is deflationary (or disinflationary, if you prefer).

Fri, 03/07/2014 - 16:23 | 4522611 Bear
Bear's picture

Buy baby, buy

Fri, 03/07/2014 - 16:23 | 4522617 mr1963
mr1963's picture

Can you say wealth transfer? Or dare we say reparations...

The student loans are never being paid back. The car loans, good luck getting the care back with a gun stuck in your face.

Fri, 03/07/2014 - 16:24 | 4522618 libertus
libertus's picture

Get of the student debt slavery bullshit. Check out these guys....www.oplerno.com They have a great business model of lower costs for students and better pay for adjucnts. 

Fri, 03/07/2014 - 16:31 | 4522649 starman
starman's picture

the name of the game is DEPT!!!!!!!!!!!! swim if you can!!!!!!!!!!!

Fri, 03/07/2014 - 16:33 | 4522658 Money_for_Nothing
Money_for_Nothing's picture

Reverse immigration. If the loans aren't forgiven then the ones who can will head south. Possibly to Canada also but less likely. Too cold.

Fri, 03/07/2014 - 16:33 | 4522659 TruthInSunshine
TruthInSunshine's picture

Debt Slavery from here to eternity BITCHEZ.

Rack up that debt high and far, deeper & wider than ever before. It's all good.

Fri, 03/07/2014 - 16:34 | 4522666 nakki
nakki's picture

Shit, students should be giving at least 110%!! Fucking slackers!

Fri, 03/07/2014 - 16:34 | 4522667 valley chick
valley chick's picture

No frigging surprise on car loans.  Was in a dealership yesterday waiting to pick up my truck that was in for service due to fire and saw the dealership packed with people at 2 pm wanting to buy vehicles and trying to get loans. WTF?

Fri, 03/07/2014 - 16:37 | 4522689 pitz
pitz's picture

Who the fuck takes out a car loan?  lol

Fri, 03/07/2014 - 17:29 | 4522923 Breezy47
Breezy47's picture

As an ex-F&I guy doing it for 20+ years the # is about 65% take out car loans to but thier car.

Fri, 03/07/2014 - 18:08 | 4523054 DonutBoy
DonutBoy's picture

Who's buying all the paper?  Surely the manufacturer's aren't keeping it.

Fri, 03/07/2014 - 16:39 | 4522705 cougar_w
cougar_w's picture

People who don't have any money can only get things on credit. They've maxed their credit cards already. The auto dealers will still give them a great deal on a car or truck with no money down and no payments until next year.

So, the average schmoe can't buy groceries but can drive away with a new car and drive the crap out of it for one year before it goes back to the dealer. The dealer won't have to deal with that piece of junk until it comes back in a year, and even then that transaction is a different part of the balance sheet. Just probably, the US government will pick up any actual losses on the contract.

Buying time. Everyone is just buying time. Maybe a week, maybe a year. Just buying whatever time they can buy at whatever cost down the road because everyone knows there is nothing going to be paid back down the road.

Fri, 03/07/2014 - 16:48 | 4522742 valley chick
valley chick's picture

Thanks cougar for the explanation as I found it odd to see the place full.  Been a while since I have purchased a new vehicle.

Fri, 03/07/2014 - 21:56 | 4523760 cynicalskeptic
cynicalskeptic's picture

Hell.. seems like a good number of people are LEASING now instead of buying......  sweet deals too.  The car manufacturers are desperate to move inventory.  Nonpayment?, they can always repo - the car is COLLATERAL.

Even those that CAN afford to BUY have bought into the 'new car every 3 years' mentality.   Know someone who gets a car allowance.  They BOUGHT a car - and actually MAKe money on the allowance now that the car is paid for.  Seems like everyone else who gets an allowance takes the money and then adds more - what they'd have spent to lease a car on their own - and go out and lease some expensive Mercedes or BMW - gotta look good.....

If you're really smart you buy a well maintained  lease turn in that's 3 years old and seen a good drop in depreciation, then drive it until it dies.  But that requires you to have some cash - you'll get reamed on the financing costs for a used car otherwise (seems like the car companies are focused on moving NEW car inventory with cheap loans).

Fri, 03/07/2014 - 16:34 | 4522670 GooseShtepping Moron
GooseShtepping Moron's picture

This proves without a doubt what posterity will judge clearly but which most today are too near the situation to perceive, viz. that our culture has no idea how to collectively act outside the paradigms of mass motoring and the obsessive (albeit useless) credentialing of middle class ennui. It is an empty, urbane, decaying existence with no justification and no future. The only solution to this problem is the emergence of a new caste system werein the class which as of now does not exist in this country, the working poor, will be permitted and expected to be both working and poor; and the threshold of middle class existence reset much higher, so that only those truly talented and cultured in a high degree may attain to it. Yet this salutary outcome, inevitable in any case, is steadfastly resisted by ideologues left, right, and alternative. Such is the American way, but it will be so no longer.

Fri, 03/07/2014 - 22:01 | 4523775 cynicalskeptic
cynicalskeptic's picture

so...... 0.01% lords and masters, maybe 2% high level 'tradesmen' to administer the estates and maintain the castles and oversee the production of goods needed with the remaining 98% serfs?

We're getting close to that now.

Fri, 03/07/2014 - 16:39 | 4522698 SAT 800
SAT 800's picture

Of course you can trust the Government; ask any Indian.

Fri, 03/07/2014 - 17:08 | 4522828 JamesBond
JamesBond's picture

Is anything past 100% of something really imporant?

 

jb

Fri, 03/07/2014 - 17:12 | 4522847 q99x2
q99x2's picture

102% of bad debt ain't all that bad.

Fri, 03/07/2014 - 21:31 | 4523680 WMM II
WMM II's picture

so, let's see.

 

if the u.s. of us is saving more, paying off debt, except when we buy a car, and the kids are gettin cash from the banks that we pay off for pennies on the dollar later,  i'd say things are goin' pretty darn good.

and, things are gettin bettor at a pace that makes more sense than the pre-last/most-recent crash-kaboom from which we are currently trying to recover.

 

:)

WallowaMountainMan

Fri, 03/07/2014 - 23:33 | 4524055 eucalyptus
eucalyptus's picture

if your tax filings are below a certain level, you can defer your student loans ad infinitum without affecting credit score. with the amount of people unemployed, under-employed, or working off the books, the amount in deferment or forbearance (with no credit score hits must be massive.

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