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Revolving Debt Crashes Most In Four Years, As Student, Car Loans Go Exponential; Bank Lending Freezes
There was only bad news in the just released Fed consumer credit report for the month of February.
First, the "good credit", the one that consumer should load up on when they feel comfortable about the future, i.e., credit card, or revolving debt, continued its recent plunge, and in February crashed by $3.7 billion, following January's $1 billion plunge. This was the worst month for revolving credit since December 2010 and explains perfectly why the consumer has literally gone into hibernation - it has nothing to do with the weather, and everything to do with the unwillingness to "charge" purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.
This plunge, however, was more than offset by a surge in "bad" credit, the type that even Obama wants to do away with, namely non-revolving credit, mostly student and to a lesser extent auto credit. In February, this debt funded almost exclusively by the US government, soared by $19.2 billion, the highest monthly notional since July 2011!
Here is the combined big picture:
And while we will never tire of watching just how exponential this non-revolving credit chart has gotten, here it is again, for any non-frequent readers. Truly a thing of beauty.
But all of the above was largely to be expected: it merely accelerated the unsustainable trends we have grown to love and expect from the centrally-planned economy.
What was by far the worst data, however, was when one drills down into the source of credit. It will surprise nobody to learn that for one more month, the source of debt to the US consumer was Uncle Sam himself. However, what is a big, red flag is the complete collapse in depository institutions lending: the $18.8 billion drop in bank lending was a shock to all, follows the $15.2 billion drop last month, and is the single biggest monthly drop since January 2011.
In other words, banks, which had resumed lending for a few months, have slammed the door shut on all new credit issuance, which means one things: instead of lending, the big banks are back to their old tricks to make money: prop trading the S&P and otherwise manipulating markets as only they can do (ref: see the JPM London Whale).
The good news is that we finally have an answer to a question we posed two weeks ago, namely whether the Fed is still fabricating loan creation data, on its H.8 statement.
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This is "where" all the spending went to IMO, this and ACA.
US focused linked article below...
Employment Train Wreck - An Economy that Needs Ever Fewer Workers and Simultaneously Needs Ever More Consumers?!?
http://econimica.blogspot.com/
Exponential function FTW.
Seems sustainable to me.
pods
The answer is yes....and that it still doesn't matter
BULLISH!!
I would like to see how the amount of consumers that foreclosures, bankruptcies, loans in default, etc. have locked out of the revolving credit market for years to come.
I wonder if even half the adult consumers in the U.S. are even eligible for any substantial revolving credit today. I mean 'real' revolving credit, not the few hundred buck cards they market to the sub-sub-prime/adverse credit types. Ten million student loans in default. Fourteen million foreclosures in the last seven years. Maybe as many personal bankruptcy filings. That's got to be taking it's toll.
There's only something like 130M households in the U.S. and about a half have a credit card balance. It's not because the other half pays it off every month. I'm guessing that a big chunk of that 'other half' simply don't qualify based on recent adverse credit history or income.
TO THE MOOOOOOON, ALICE!!!
If you filed bankruptcy 3 years ago, you are good to go now, car loan BMW Credit card from credit union and a 750 FICO.
Not under water and life is good.
Seriously? I honestly don't know - I just heard somewhere that a bankruptcy would directly affect your FICO score for seven years. If it doesn't and they only count three years of credit punishment after a bankruptcy, then I guess I'm surprised more people don't do it and get it over with. It would beat staying in credit limbo with an imminent forclosure or loans in delinquency or default. You would be better off getting the three-year clock started sooner than later. Had a relative go through bankruptcy and he got to keep his house and car and is pretty happy with life now. Same job, same income as before. No idea of what 'kind' of bankruptcy he filed and he doesn't care about his credit anymore (wiser for the ordeal).
It would still suck for anyone with a student loan. Non-dischargeable, so you're not getting out of that in bankruptcy. If your masters degree and Wal*Mart job isn't enough for payments, then you will remain constantly delinquent or in default. Except Wal*Mart runs credit checks on the slaves now, so you'll probably lose that job. Most big employers HR departments also do background/credit checks, so you're not getting any kind of professional job in your career field because your'e behind on your student loans. Your choices at that point are: the Army or go back to school full-time for your PhD for the deferrment. Except you can't get another student loan if you're already delinquent. Ruck up, soldier.
Total revolving credit.
From 1970-1990 - it went up about 5x.
So from 2000 to 2020, could easily double from here.
Which is not to say that I like it. But fading it from the short side......... yeah, it hasn't been working.
Holy crap - I got a response from THE Tyler Durden? I'm not worthy! I'm not worthy!
Merikans are broke donkeys and it's slowing overseas also. However, I now see realtors trying [begging] to appeal more and more to wealthier Chinese to buy houses "as an investment" despite soaring property taxes and, HOA fees and homeowners insurance.
Passing the hot potato until the music stops.
property taxes in many cases more than a mortgage payment - it is getting bizarre - you can pay off the house and still have big nut to carry with insurance and taxes -
the idea you have to provide for public education is next on the chopping block - want kids.......... pay for them yourself
this is true. Pay 700k for a home in NJ, pay it off, and still have 2k/mo tax bill, which is almost enough for another 500k mtg.
Dunno what planet you're living on, but the Chinese (or at least their reps) are a big portion of most cash auctions in the US these days; noone is talking honorable grandpa into RE...they're buying blocks.
Actually savings are up.
http://www.tradingeconomics.com/united-states/personal-savings
Isn't savings = income - consumption? Thus 5k income, $500 student loan payment = 10%savings rate.
Credit card spending plunged because people have so much cash from the gasoline tax cut, they no longer need to use credit cards. We're in the money, we're in the money........
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://goo.gl/9YqZBb
When will the acct deletion go into play for this fcker? Come on Sacrilege!
I think you mean February. The Fed cannot predict the future Or can it?
it's behaviour is consistent with a fervent belief of being perfectly able to do so
Revolving credit collapsing? That's strange because I'm wracking up as much credit card debt as I can each week just before I file bankruptcy. Fuck the assholes who "lent" me something that never existed until I spent it.
Non-revolving credit is okay if it is used to buy stocks. /s S Liesman
from a debtor standpoint the nice thing about revolving credit is that it is easily written off in bankruptcy. with auto loans they repo your car, which you may need, student loans they repo your soul, which was never yours to begin with in the great kleptocracy.
Don't have any student loan debt, but if we are headed where I think we are, I won't need a soul either.
If the revolving credit is unsecured, it's basically a freebie for many folks who know they'll never pay it back.
... and the demand for "free shit" goes infinite.
On the other side are banks who care less about risk since they know they'll be bailed out no matter what the loss.
It's the greased palm that keeps corporations afloat. As if all those buybacks and two-comma bonuses and golden toilet-parachutes could happen without the bubblicious interventionism of credit money.
With "student loans" (all "loans," actually):
Just ask to see proof the money existed before it was "loaned" to you. You know, proof that YOU, the signatory, didn't just create it with your signature.
Won't happen. Can't happen. Because YOU are the "grantor/creator/creditor." Dead things (banks, governments, etc.) can't do/create anything. They require living states (YOU) to generate the money. They then fool you into believing that they generously loaned you the money.
At that point, repudiate, and demand they give the money YOU leant THEM back, with interest.
My prediction: when this (the actual mechanics of "loans") is grasped by the public, there won't be a spare streetlamp left.
I really dont understand how all of you can be so dumb on student loans You get credit cards to the max get big limits on them it is easy then pay your student loan with them then file bankruptcy.
It seems you did not learn shit in school.
It's okay. We owe it to ourselves.
Actually, "They" owe it to "Us." We were the grantor/creator of the funds. They can't create money, only living states of being can.
Valid contracts require two living signatures on 'em.
Negotiable instruments ("currency"), only one.
I'm quite sure that was sarc.
I'm sure it was, too.
But the truth remains.
A consumer "loan" is not entered as a liability, but an asset on the books of all the large holders of said currency.
And they are just that: currency.
When you sign your name on a "loan document," you just created an "N" dollar bill ("N" being the amount of the "loan"). You hand this over, and are given a similar amount in script. And then get to pay the same amount AGAIN, plus interest, for the privilege of giving this dead entity free money.
The negotiable instrument is taken, hypothecated (often several times...things you may have heard of called "derivatives..."), and the "lender" instantly has doubled or tripled their money. Thanks to YOU, for "printing money out of thin air" for them.
The "lender" put forth no risk- the money did not exist before your signature. They collect free money, to the tune of 3-10 times the original amount you created for them.
Whereas YOU, the de-facto GRANTOR/CREDITOR, are put into a tight spot financially- property you purchase can be "legally" stolen from you if you don't "pay back" the loan you "took" (in the case of secured loans), or simply turn you into an indentured servant or pariah for life (in the case of "student loans" that remain with you like the Scarlet Letter).
This is how things actually work.
Yet the ignorati repeat the same rubrick over and over: "you 'took' this loan, so you are obligated to pay it back.'"
Nope.
I have absolutely no problem with legitimate loans- wherein one human being loans money they actually *have* to another human being, for a set amount of time (during which they (the lender) do not have the use of those funds), and are compensated with a reasonable rate of interest (reflecting the time the money was not available to them). Above board "lending" involves risk, and skin in the game, for BOTH parties involved.
However, the current "system" is illegitimate, criminal, and fraudulent. Lenders have NO risk, and full recourse to HARM the "borrower" (who is actually the true creditor).
The sooner the Public pulls their collective heads from their rectums and repudiates en masse, while demanding principle and interest be returned to them, the sooner things will return to normal.
Or, abnormal, since this sort of thing has never happened before.
I don't know about you, but I think we could do a lot with the $15+ trillion ($15+ trillion divided by 350 million is still a nice little chunk of change) that is currently owed to US, the living, Free States. One of the most important first steps: stop the in-fighting that is instigated by the false dichotomy of politics (which is just another artifice created to divide the Public), and find ways to circumvent the sociopaths. Un-vote and repudiate.
Better start hocking your shit, Congress.
Graph is intentionally misleading. Things in finance should always be plotted on log graphs. When doing this, steady exponential growth appears as a straight line. Looking at a curved line is totally meaningless. Our brains can't comprehend their meaning.
you're stupid
Less debt from bankers is good for liberty; but for a neo-liberal debt-based economy? It's LOL
I'm 100% certain that ZERO jew UNIVERSITY STUDENT candidates, going #FOARWARD, will EVER even THINK to make it a method to 'game' the student loan forgiveness system to get their meal ticket diploma from Cornell or, if they're just an average dumbfuck, Syracuse...
So we have that going for us!
I just got a 60K loan from the CDC with 6% APR with a 7 year term to start my small business.
So there's that.
Centre for Disease Control?
Must be starting an STD clinic.
Car go beep beep!
Where's my goddamned FLYING CAR that goes beep beep?
Oh I forgot... It's getting spent on paychecks at Jooze Allen [for the greater good of mother Israel whose PEOPLE 'SUFFERED' under the whip of Pharaoh all those years]...
They even wrote a book about it!... Imagine that! STORYTELLERS!
Oh you pretty Chitty Bang Bang....
Car go cult.
A mate of mine comes into work, shows off his subaru impreza. Took a loan for best part of 20K so I guess he is some where near the tip since this all happened, oh last month? I think when this is all over they'll rewrite piano man replacing all the 60's to 80's quotes with todays problems. I wouldn't bet on anyone being able to buy it then though
I think you meant "We didn't start the fire" not Piano Man. Although he had some observations on more local situations.
Dispatching Labor
Feudalism, employing poverty to inflate RE control and price, is the primary source of dissonance, noise, gravity, whatever you want to look at, which depends upon Family Law, the arbitrary assignment of debt with no due process, as a catch-all, for those who escape filtering by the law, the FILO bankruptcy queue. Credit access merely pays compliance, without which poverty, in the empire, is nearly certain.
The market, geared to pensions, feudalists pitting Boomers against Millenials, is inflating because money, in all its forms, is becoming increasingly worthless as a measuring device. Moving the monetary function to China, amidst the noise of an efficient killing machine, isn’t changing anything, but the baseline. Closed proprietary systems are a failure, because the set point is arbitrary relative to nature, resulting in a positive feedback loop with climate variability, PT, which dc cannot tolerate for long.
Empire gravity is like a truck. Depending upon the cargo, you want to head the truck uphill, downhill or to a level surface. You don’t need to know where the elevator is to dispatch it. In fact, you don’t want to know where it is. What you care about is balance, because energy is neither created nor destroyed. It is simply transferred. The opportunity cost is that which the herd cannot see, which is most everything, because it spends an increasing amount of time mapping a shrinking corner of the box it chooses to inhabit.
When in doubt, turn uphill. You can always coast back down, with greater perspective. You don’t need physical switches on a rail, if you employ gravity, against itself. Empire is just a brake, in the form of a political buffer. The more effort it employs to hunt you down, the bigger the cloud, the more it brakes itself, which is no emergency to labor, dispatching itself, leaving money behind to chase itself.
The non-profits are really taking the wood to my pregnant wife for having the temerity to work, saving their A every time they fail, empire SOP, and they can’t figure out how she always rises above it, so they gather more wood. Growing little ones under a microscope has its advantages. The accounting wizard changes nothing, but the actuarial duration mismatch, inflating away the pensions, hiring 55+ at Wal-Mart.
The empire loses the spiritual war, and then the intellectual war and then the physical war, winning all the battles. Crony capitalism, crony socialism or crony communism; private, public or non-profit; it’s all the same to labor. Empire globalization is its own worst enemy. But keep building those hospitals in the city, consuming garbage, expecting a different outcome, a crowd in a sandbox, fighting over disposable toys. Desalination ships? Next.
The empire computes itself, assuming that the universe does the same. If you say something often enough, that doesn’t make it true. If you need to be liked, to belong to a herd, marriage isn’t for you; buy property with other people’s debt instead, and mimic marriage, with contract law. Warren Buffet isn’t vertically integrated, to pump paper profits, with pension paper as fuel, by accident.
The actuarial accountants need your children, to multiply earnings, which are not earned, in the calculation of NPV, to maintain financial smoke and mirrors, until they can’t. In the empire, no good deed goes unpunished, which is why labor is a stranger, and G is always an accounting ponzi, in search of a scapegoat. You may want to open up commercial loans to intelligent labor, or not and keep chasing digital money in a digital cloud. There is no private economy in America, which the empire can see, from China or anywhere else.
Seeing LOTS of new cars around Houston. Mustangs, challengers, new big suv's and trucks.
Must be the severance checks from all those laid off oil industry workers
http://www.bizjournals.com/houston/news/2015/04/07/noble-energy-to-cut-u...
Same thing in Phoenix. New Camaros and Mustangs all over place. 7 year car loans to idiots? I don't get it. :|
Here's the deal. They get the dumbass trying to impress his girlfriend to sign onto $35k in credit for a $15k piece of shit that looks cool but runs like pure unadulterated ass, they collect some payments for awhile (hey, even 'The Situation' had a payday!) and when the jig is up, they punt the collection on to someone else for a portion of that fat $35k whale of a loan (x 30000) and the pennies on the dollar make up another record bonus year.
Kind of contradicts the consumer confidence number.
The consumer is confident because they're buying less crap and have more money to pay their bills now?
You mean like realizing not buying things you don't need to impress people you don't like...won't kill you?
We are in the late innings of THE LONG EMERGENCY http://en.wikipedia.org/wiki/The_Long_Emergency
If you read that book you will note that the author predicted well in advance the crash of 2008
Kunstler? Puh-leeezzz.
Most Since Lehman®
Of course they are fabricating the data. It's all been fabricated for years.
deep indebt try this:
'According to the Daily Treasury Statement for Friday, April 3, which was published by the U.S. Treasury on Monday, April 6, that portion of the federal debt that is subject to a legal limit set by Congress closed the day at $18,112,975,000,000—for the 21st day in a row.
$18,112,975,000,000 is about $25 million below the current legal debt limit of $18,113,000,080,959.35.'
nah. that's just a glitch from the Y2K bug.
I think it passed the limit right after you finished writing the sentence.
The local Ford dealer's used cars all offer guaranteed financing, no matter your credit. At 21% APR. With a $1200 "origination fee" that goes straight to the lender, doesn't apply to loan or equity. My friend there says they're having trouble keeping up with demand.
There's no shortage of idiots in America
Or desperate people who HAVE to have a car to survive in a world that is built entirely to be navigated by cars.
..or people who have zero intent of making even one payment. Throw a drowning person a lifering and he will grab it.
If only I knew when the shit will finally hit the fan....I'd take a loan for all the vehicles I'd need until death, go back to school forever, buy as much food, gold, silver, ammo and weapons I possibly could charge and then say "I default".
But that would be stealing
And when everyone does it ... "Hey, where'd all that food I was gonna buy go?"
Told the ex about refi, between her car $700 and house about $1200k, think she owes me another "thank you".
No clue how people afford this stuff with kids. I am single, no kid, decent income, and no debt, sound like an octogenarian when it comes to most purchases.
How ya expect us to BTFD without our student loans.
That Chevy Aveo with no money down and 84 month loan looks better everyday!
It seems strange that we are all being told to worry about the health of a bunch of banker debt, over and over ad infinitum. Why would any of us care? Do they think that they can make us care by scaring us?
When will the actual threats start?
"unwillingness to "charge" purchases,"
Sounds like a good thing. Debt levels were unsustainable. Dealing with recognising that you have a problem is a good first step.
True. Cant see why this is deemed a bad development.
I once knew a kid who's tongue fell out in his sleep....
We credit-extended some folks