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Consumer Credit Has Fifth Biggest Monthly Jump In History; Revolving Credit Soars By Most Since November 2007
A month ago we pointed out that with April US consumer savings plunging to levels not seen since Lehman, the only place where the tapped out consumer could find some purchasing power is by maxing out their credit cards. This is precisely what happened: moments ago the Fed released its April consumer credit report and it was a doozy: expected to print at $15.00 billion, down from a pre-revision $17.5 billion, the April total instead exploded to a whopping $26.85 billion. This was the fifth biggest surge in history, and was only surpassed by the 2010 "cash for clunkers" record, as well as previous one time outliers in 1998, 2001, and 2006.
Also of note: after revolving credit had for months done nothing at all, rising by a tiny $12 billion in the trailing 12 months at the end of March 2014, in April it soared by a near record $8.8 billion: this was the single highest monthly revolving credit increase since November 2007.
Spot the month in which the US consumer finally screamed uncle and started not only charging everything but revolving it, i.e. not making the full payment at the end of the month:
And finally, confirming that the student and car loan bubble will continue until they pop is that non-revolving credit also surged, rising by $18 billion, the single highest monthly increase since February 2013! At least we know where all that cash for car purchases in April and May came from.
In short, the US consumer is back and as broke, and charging everything, as in the good old days.
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A responsible thought would be: "income must be rising" (hysterical laugh track, getting louder, louder, pffft, speakers blew again)
Seriously does anybody even give a fat flying fuck about any of these numbers and charts anymore. It's all just meaningless bullshit at this point. We are seeing the same story regurgitated everyday with different numbers, charts, and entities. The same people doing the same shit; "hey didja hear what Drahgi, Bernenke, Geithner, Yellen, Greece, Ireland, Spain, the Fed, Merkle, Putin, Ukraine, DOW, NASDAQ, VIX, Pricks, POMO, DOMO, HOMO, Fuck a doodle dandy did, said, is going to do, may do, didn't do, threatened to do and what it means explained by these next 15,000,000 charts and graphs."
Seriously this is what I see now and I am truly not giving a shit about a fucking thing any longer. I can't beleive a single solitary word, graphic, video, or story I see with the exception of WB7's work and Boris Alotovcrap's commentary.
End of rant. You may go back to your previously scheduled ZH comments. Thank you for listening.
capitulation
Would this have anything to do with all the idiots getting tax return "advances?"
Nothing like loaning your money to fedgov interest free for up to a year, only to pay interest to get it back a few weeks sooner.
We're gonna need a bigger face-palm.
Obamacare premiums.
Lack in disposable income made up with credit card.
Holy shit, what interest rates are being charged?
What about me?
Well all I can say to you is thank you for your service and stay the hell away from any VA Hospitals. If you can afford to that is.
Banana Republic run by monkeys...
Yup.
These monkeys...
http://www.youtube.com/watch?v=VRrMu7B1L2I
The question is, once it all goes south, will those monkeys give way to these monkeys?
http://www.youtube.com/watch?v=Jt3aLev041E&feature=kp
Folks, I have a question.
One generally knows that student loans cannot be expunged via bankruptcy.
But credit card debt can be expunged via bankruptcy.
Another form of debt that cannot be expunged via bankruptcy is fraud.
But . . . as long as one is quiet and gradual about it, it does not seem to me absurd to presume that kids can generate some cash advances and pay off the student loan.
And then a year or so later discover that son of a gun, the credit card debt is too large to handle and boom, bankruptcy is declared.
Anyone know why this won't work?
Re: Anyone know why this won't work?
Probably would. Most American's would be to "morally uncomfortable" with doing this, tho (I think).
Well, that may have been were TPTB overplayed their hand. The system (where their wealth is) depends on the little guy feeling that patriotic morality that prevents him from "aping his betters" as far as bad behaviors go. This allows the ones at the top to act without restraint, knowing that the rank and file will keep the thing going for them, and clean up their messes.
Things change completely when those little guys start going Machiavelli on their own and stop giving a shit about the system.
student loans on their face cannot be forgiven.
the wall has been broken with recent developments and quite possibly a flood will occur as more and more senators wake up to the fact that their reelection depends on breaking the sacred cow as it now exists.
Under what theory should education loans be held to any different standard than other lending agreements?
Did not our future president, the esteemed H, sell her college constituents down the river for this protection from discharge?
Yes. It will become politically expedient to forgive student loan debt.
And then bail out the lenders from the public treasury of course.
Whole Foods and every other store takes credit cards
Nobody uses cash
This is just timing...watch for a drop next month
And do we here even believe Govt numbers anymore?
"Will"? The feds have been monetizing that one to the tune of tens if not hundreds of billions too.
Of course is anyone even attending school anymore? How about even teaching????
Sorry but plunging interest rates says to me your tax base has been utterly annihilated here.
As prices for commodities (save energy...of course...and nickel interestingly) start rolling over for the mighty swan dive into the empty swimming pool ... well, that high yield (2 percent?) can become real cheap real fast. Just a move in the junk space to 4% would be a crusher.
Could get a mild correction in equities. (5%)...but the correction in non Treasury debt could really be one for the ages.
Price of gasoline about to double here???!!!
Here is some advice regarding CrashisOptimistic's idea
http://www.moranlaw.net/plastic.htm
Yes, this is why I mentioned fraud in the original post.
There may be a formula that escapes the issue. Also, one of the items mentioned "settle with the institution challenging the filing" -- that looks like a discount on the student loan to me.
Crash, you just hit on a loophole that more than a few grad students I know have already come up with. ramp up student loan debt, pay it off with CC debt, declare bankruptcy. 7 years later, you're home free. in fact, it wasn't more than 3 weeks ago this was highlighted to me. the only challenge is maintaining a balance between the size of student/CC debt so that all of the former gets wiped out by the latter; sometimes it's not that easy.
the logic behind it is intriguing, and a little depressing. "if the banks can get free money and write off their losses, why can't i?"
looks like the new normal is all about gaming the system while it lets itself be gamed.
at some point CC companies will cry foul, but I haven't heard anything about that yet.
The credt card co. fuckheads probably don't care since they know they'll just get bailed out anyway.
I doubt the students have a $30,000 credit card limit. That would be the hitch.
http://money.cnn.com/2013/12/04/pf/college/student-loan-debt/
This time it's different. No sarcasm, it really is different. This time the bubble is much bigger. Of course, no need to buy VIX, because, what can go wrong?
If we knew the stock values were going to continue over the next 6 months like they have over the past six months, we'd be taking double & triple mortgages, selling the dog, everything to get more of the stocks, so that would explain the new consumer debt, right? People are borrowing to get in because in six months you can sell out and pay off the freaking mortgage and buy the dog back from the pound.
They're borrowing to keep their lifestyle and keep up appearances. Bacon is $7/lb in some places. I'm going to sound like an old man for writing a "when I was a boy" comment, but here goes:
When I was a boy, gas was 99 cents a gallon, eggs were 89 cents a dozen, and bacon was a 99 cents a pound. I'm 33. I'm not old. And when I said, "When I was a boy", I was talking about when I was in college. Entry level salaries of $40k for a college grad were common. $40k is still common for entry level if you can get it, but that blows dick when you look at your expenses.
I don't have a personal solution to the bacon angle (yet,) but food in general is something that you should try to produce, even if you only have a small back yard. I just asked my neighbor if I could take a few cuttings of raspberry bush, and she said "There are suckers that I was going to get rid of anyway. Please take at least a dozen." They're first year plants, so they'll not produce this year, but it would cost me well over $100 to get that many raspberry plants in a nursery. Next year, after I've saved seed from my Navajo Cushaw Tail Squashes, I'm going to return the favor by giving her as much seed as she wants. This is straight up barter, and it is something that you can do to avoid some of the expensive food prices. If she wants some of my sweet corn seed next year, she's welcome to it. I'll actually wind up saving far more than I'll plant. If you have room, start building up your own seed, learning how to save seed and breed plants, and, if you don't want your neighbors thinking you're a doomer, just tell them that the food that you buy today is overpriced crap (because it is,) and maybe get them in on growing their own too.
Re: This time the bubble is much bigger.
Yes, indeed. Plus, we've still got the housing bubble to re-inflate again.
ah yes, just in time for the 3:30 ramp to take the market higher and higher and higher...Oh the joy.
16,907 at 3:39.
I'll gladly pay you Tuesday, for a Bentley today...
Arrest the money changers and we wouldn't have that problem.
And there is your self-sustaining economy, just as LIEsman advised. Beyond words.
As THEE wisest of the wise bearded ones says: Macro-economics isn't a morality play.
It's not who wins or loses; all that matters is there's more debt so that the "Keynesian" Model can predict perpetually increasing growth.
Looks like those who bought stocks over the last 5 years were right. The consumer is back. And, it looks like (from the blue chart) there's gonna be another year of good times.
That'd be me. I went all in. Remortgaged the house, the cars, the dog. I'm putting it all on black, I mean Amazon, Uber and Facebook.
People are really confident in their jobs and the economy. I am sure folks out there are not just charging cell phones, gas, groceries on these credit cards.
with that massive negative .01 jump in April consumer spending, why would anyone question the health of the consumer?
Livin la vida loca
Feeling fine like '29. Watch that flagman, he ain't just another bagman.
Credit should expand only when incomes are expanding....
Otherwise paying it back will cause some serious pain.
The magic is not paying it back.
no....the magic is borrowing to pay for the previous borrowing. payback? thats for losers and countries without printers.
The banks need these high interest loans to package and sell to the "investors". Got to keep this carnival ride hoppin.
Just more redistribution as when this shit goes bad, the investors, those with disposable wealth, will have their wealth disposed of. The consumers will get another bad mark next to their name so the next time they "borrow" they will know which security to package them in for the best effect.
Time to wrap it up in one of those fancy Goldman Sachs 'AAA' Rated Comercial Paper products.
My credit is shot. Yet on the cards I haven't defaulted on , they just increased the available another $5,000. Unsolicited by the way.
I took it.
Only one solution: Raise the debt ceiling!
Or dig the bottom out good & hollow.
I only have a 2 burner grill but Tepper will fit in there, somehow... maybe upper and lower torso style
The dead beat American consumer is too big to fail, by way of US banks.
I swear to God that the people with shitty credit are more valuable to these banks than those with good credit.
The best part is, those who care not if they pay their bills, are much more likely to "spend" in a shitty economy than those with solid credit practices. Another negative effect of living responsibly.
Could this be Obamacare premiums?
where is a commensurate rise in retail spending to match all that borrowing?
Next month.
According to Experian, the average monthly payment for a new car auto loan is $471, and $352 for used car.
One of two things is going to happen: inflation surges and these people realize that they spent too much on a depreciating asset, or inflation surges and the Fed reacts by hiking rates and causing the economy to grind to a halt, which will make these people realize that they spent too much on a depreciating asset.
Boy, what a pessimist...
Or inflation surges and people pay off the debts with their ever increasing wages; proving how wise they were for borrowing now.
+1000 "ever increasing wages"
i'm going to use that one, laugh riot.
Agenda 21 feeds on bankruptcies.
Driving the herd into the slaughterhouse.
at least the Fed makes an effort to make up consistent numbers. i mean, how can consumer spending be negative in april and credit card use ramp to 'good times are here to stay' levels? "ah, yes, let's make these numbers jibe."
or maybe this will be the goal-seeked impetus for a revised rise in april consumer spending. cuz it will make Q2 GDP look better, which will tell everyone "the Fed knows what it's doing" and all will be unicorns and rainbows in the world. "Taper is on because of a better economy, NOT, I repeat, NOT because the risks to the financial system are growing exponentially with every day of POMO."
i'm guessing the latter.
The only reason to be all in on treasuries is because someone or something is WAY overextended.
No one knew about Bernie Madoff until AFTER the collapse.
Danger Will Robinson
Well, I'm not biting at the hook, but damn! Imagine if the attitude has become, "The hell with it, I'm TAKING my share!". Imagine if people really ARE taking the credit with NO intention of paying it off?
And, about those student loans...it doesn't have to be just the student's using their own cards...mom and dad can take out a few advances too, and help junior out. Then the whole family can go down to the courthouse together!
Hey, it's the new normal, right?
I can't blame them, and all I can say is if they're gonna do it, go BIG...make it COUNT.