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The Source Of The US Economy's Only Bright Spot: $1 Trillion In Car Loans
Moments ago, the Federal Reserve released the latest, August, data on consumer credit which rose by $16 billion in the month, below the $19.5 billion expected, consisting of a $4 billion increase in credit card debt, and $12 billion in non-revolving, or auto and student loans, which at a combined total of $2.55 trillion now account for 73% of total US consumer credit.
The combined total monthly increase was the lowest since February on the back of a slowdown in non-revolving debt, while the increase in revolving credit was the weakest since May.
And while the headline number was uninspiring, focusing on what has been the biggest source of consumer spending in recent years, namely auto and student loans reveals the following interest charts.
First, only one word can describe the chart of total non-revolving credit: parabolic.
Second, while it will come as no surprise to anyone that government student loans, which surpassed $1 trillion over 3 years ago, continue soaring...
and are now funded entirely by the government...
... it is auto loans where the real action is.
In fact, as the following chart shows, after langushing between $70 and $800 billion in the second half of the last decade, since Q2 2010 US auto loans have been on an absolute tear, and have increased by over 40% in the past five years alone, to just shy of $1 trillion as of June 30!
This means that as of this moment both auto and student loans are well above the $1 trillion mark. It also explains why as most other parts of the US economy continue to stagnate, the US auto sector remains the only bright spot in an otherwise dreary landscape.
The flipside, of course, is that once (or rather if) rates eventually rise, and banks start demanding higher interest payments for all new car loans which have become the only source of incremental buying power, that will be the day one can finally kiss the US auto golden age, propped by some $300 billion in debt (not to mention a couple of government bailouts to boot) in the past 5 years, goodbye.
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Yeah, bright spot like a laser pointer in the eye.
Its all debt. Fukin crazy.
When the debt bubble pops, and it will, it will be the largest debt bubble of all time. It will change the landscape of history for hundreds of years. The debt burden will wipe out banks across all lending sectors. People will charge high interest for loans and collateral will be nonnegotiable from there on out.
You can live in a car but you can't drive a house.
VW out of the way.
Now on to Toyota. US wants to know how ISIS has Toyota trucks.
http://www.cnn.com/2015/10/06/politics/u-s-treasury-isis-toyota/index.html
ISIS has Toyota trucks because they are funded by the CIA. Using GM vehicles would have been a little TOO obvious.
Knowing how the USSA strategizes and runs overseas operations, they probably were using Ford/GM vehicles, but they kept breaking down in the harsh desert climate.
Case in Point the genius' handling the supply chain losgistics really fucked the dog on this one:
Mark's Plumbing Truck Used by ISIS:
http://i.ytimg.com/vi/TmZB-p-u55g/maxresdefault.jpg
Finally the Pentagram said "fuck it", and Toyota in Saudi Arabia got a huge order. Toyota's are the only vehicles that can last in the desert anyway.
The incompetence is just fucking unreal.
I have been gainfully employed as a car salesman since Q2 2010. Each year my salary has increased significantly, but this year I may finally not do better than last year, although still very very good compared to what other people my age (28) make.
hey nodebt "You can live in a car but you can't drive a house." reminds me of the redneck comedian (whose name i forget) when he said "you know you're a redneck if you rotate the tires on your house"
Jeff Foxworthy?
Crazy is right. I work for a supplier to the auto industry and we're expanding production capacity. It's like nobody can remember what happened just 7 years ago. Plant closings, headcount reductions, etc. I asked our corporate controller who on his team is looking at the big picture. Absolute deer in the headlights.
Someone still thinks gas/oil is necessary for at least 7 years. In 2014, 62 percent of the auto loans were for terms over 60 months. And nearly 20 percent of the loans were for 73- to 84-month terms (Edmunds).
Media must lay down cover for Zippy the queer chimp.
And you wonder why we are swimming in debt? I've had the same Toyota Corolla for 20 years. That's 20 years since I last paid for a car 'cause I paid for it all in cash.
This is the very last kind of commodity/debt anyone, save for the 10%, should hoist on their shoulders.
NINJA car loans ... we knew it was coming.
Recently I saw a telling line on an auto-related blog written by someone in the business, who stated that 'Chrysler would finance a family pet.'
Maybe he was talking about a road runner. Ford once financed cougars and still sells mustangs, and you can still get an impala from GM. Fish also were available. You could bring home a barracuda, a marlin, or a stingray. I never quite figured out if a camry was animal, vegetable or mineral though.
Iphones loans at 359% apr comming soon. Just to repay the car loans.
NO BUBBLE HERE!
MOVE ALONG!
Excuse my ignorance, but doesn't non-revolving credit, by the mechanics of a debt based monetary system HAVE to grow parabolically, or the entire facade comes crashing down in a deflationary mess?
Yes. The charts in this article are not that staggering when put in line with the Fed printing machine. The bubble that will pop is eventually going to be the inflation suppression bubble. Dollars are too plentiful.
"Dollars are too plentiful."
Sigh...not in my world...
What gets me is that some people are still paying off their car loans from the 1940s. /haha
Debt Ponzi! Everything is awesome...it has that new car co-ed smell
Must go out and buy my Ford F350 4x4 w/ fish finder, diesel, crew cab, long bed truck along with my new bass fishing boat before they start raising those interest rates because I deserve it for just being born, gad dammit. I will make sure I finance that phucker for 240 months, just to keep my monthly paymnts as low as possible, gad dammit I deserve it. I am entitled to as much stuff as I can possibly get even though my fat ass sits if front of a tv all day long, gad dammit!!
I was arguing with a coworker the other day, they thought that easier loans and stimulus were good to "boost" the economy..LOL...This person was also in elected office somewhere in Illiinois....Any idea what drugs I can take to become that delusional?
You said Illinois.
Illinois, where Chicago's bonds have a junk rating. Where the credit cards issued to the state cops aren't honored at some gas stations. Where if you win >25K in the lottery you are put on a waiting list. Where food is taxed and property taxes are absolutely through the roof.
Land of Lincoln.
Only if you breath a VW gas emission like for 10 minutes. BTw im not kidding.
Shiny wheels and chasin' tail at the college; and it only cost us $2 Trillion!
Good Times, Bro, Good Times!
For the first time in over 20 years I bought a vehicle with a car loan. At 0% why would anyone pay cash?
I'm holding out for the negative interest car loan. Getting paid to buy a car seems better than 0%.
I did buy a new car last year. My old one was nine years old. I got 0% for 60 months and was sold the car for $5500 off sticker, $25k car for $19k.
Just think, if you kept your car another two years, you could have had $7600 in your bank so they could bail it in.
My car is 10 this year, soon to be 11. I intend to keep it as long as i am relatively certain it won't leave me somewhere, or until they choose bail in's. Then every dime will be lost at the casino/bottom of lake/ spent on blow/and a new car.
Well, when you can now get 96 month car loans, what do you expect.
It used to be that a kid graduating from college would go out and buy a house as a point of status.
Since they can't afford a house, they buy a car. Ally financial will give any recent grad a loan no matter what their income is. If you are 22, with no prospect of leaving mom and dad's basement, at least have a sweet ride.
Oh yeah, I also forgot about Uber. All the millennials think that they can go out an finance an Audi for twelve years and pay it off driving for Uber.
Like when I saw the top end Hyundai Genesis driving for Dominoes.
At least with a car or truck you can get some enjoyment out of it before you default on the loan leaving the banks or car companies with a depreciating asset.
With a college degree you get a worthless (in most cases) piece of paper and if you had to borrow money to get it, you can't default on it.
The paper is worthless if they get a 'studies' degree.
The paper is worthless if they weren't taught HOW to think, usually they are taught what to think, irrespective of degree type. Try getting a PhD in any field where your submitted works don't conform to their ideals...it will not happen (i worked for a big name paper provider for over a decade, i know half a dozen personally and have heard of several dozen that were told to revise their worldview and re-write the works (one time only please) to the suggestion that they will not pass and eventually get dropped from the program.
All you see is NOT as it appears.
I gather it is far worse now than in the (not so distant) past. The general requirements used to be a) Follow (and therefore understand) others' work, b) Produce original research, and c) Understand how to present this research (via e.g. publications and/or Conference presentations), in the context of your field of interest.
The big problem was your Supervisor. A Good Supervisor could make the work interesting, rewarding and fruitful (in terms of "publishability"). Conversely a bad Supervisor could make the three years a very hard slog indeed, with needless (and to you costly) waste of time and effort, especially in the pre- Word Processor era.
Needless to say I managed to find the latter. Minimal useful input, "always there when you didn't need him; never there when you did", keen to have his name on the papers I published (nil to minimal input), and because of his slowness (and the "need" for me to do a number of near - identical rewrites), it was a very close thing.
The final straw was a VERY brief 4-line note from him saying I'd missed the submission deadline. Contacted the Registry, requested a TWO WEEK extension, got it (the Registry would have been willing to give me a few more YEARS if needed!), submitted, Viva was long but fruitful, and the award was very much a formality (since I had already fulfilled ALL the necessary steps). Oh - he didn't bother to turn up for my Viva, which was "unusual" per the External Examiner, since it was generally expected that your Supervisor must be there to provide support if needed.
Never heard from him since. Certainly no thanks for his copy of my Thesis, but after the Viva incident, I was far from surprised.
I remember how much that helped ACF during the last downturn.
And how much of this 1 $trillion (me thinks that someone is making a huge over statement here since auto sales are nowhere near what they were in 2005)...I do know that auto re-financing has gotten quite big....How much of this fake $1 trillion is refi's?
job of the Future
2018 ish
REPOman
600'000 openings
But we will need 2,400,000 grave diggers also
median Pay $2 daily
Think about this; you effectively can finance a new car for 9 or 10 years.
Lease for the first 3, then take out a loan to purchase for another 6 (maybe even 7).
What are the odds the collateral is still running at that point?
Major implications for the auto insurance industry. My company had a milestone year, so in celebration and thanks I got a coffee cup filled with starlight mints and including a short note from leader-person. The short note from leader-person informed me of the company milestone and drew a correlation from the nebulous 'great work we [employes] do' to the milestone achievement. The timing on this post was like an answer to a question I didn't realize I had or something. The world is ridiculously out of my control. Always.