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Consumer Credit Misses As Revolving Credit Has Biggest Contraction Since April 2011

Tyler Durden's picture




 

Just like every other aspect of the global economy and capital markets, the sudden, rapid moves in every times series are becoming increasingly more pronounced: today's case in point - consumer credit. Instead of rising by the expected $10.25 billion in June, following the whopper of a May bounce when it grew by $17 billion, in June, credit rose by only $6.46 billion. On the surface this was not a big miss and was the 10th consecutive increase in a row, driven exclusively by non-revolving credit - i.e. student and GM subprime loans. However, looking below the surface shows that following May's biggest monthly surge in revolving credit since November 2007 (+$7.5 billion), consumers have again expressed a revulsion to credit, with revolving credit sliding by $3.7 billion: this was the biggest monthly contraction in revolving credit since April 2011, and before that since February 2009. Did Americans developed a sudden taste for credit funded consumption in May, only to puke it all up and then some in June? It sure appears that way based on recent retail sales numbers. The July retail sales number will simply confirm if the re-icing of US consumers has continued for another month.

Finally the reason why the overall credit number posted an expansion in June is simple. Of the $6.2 billion in NSA increase in consumer credit, $5.8 billion came from one source. Take a will guess which one (the hint is highlighted in the chart below).

 

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Tue, 08/07/2012 - 15:35 | 2685580 Atlantis Consigliore
Atlantis Consigliore's picture

Starve the economy into recession capital and stock strike too.

 

Break the banks.....close the businesses, 1099 everyone. 

Tue, 08/07/2012 - 15:38 | 2685591 NotApplicable
NotApplicable's picture

I have to wonder if the "movement" isn't due to the lowering of credit limits?

Tue, 08/07/2012 - 16:47 | 2685763 Doubleguns
Doubleguns's picture

How about the may bounce was from tax returns completed in April. Spend th expected returns in May.

Tue, 08/07/2012 - 16:47 | 2685764 Doubleguns
Doubleguns's picture

How about the may bounce was from tax returns completed in April. Spend th expected returns in May.

Tue, 08/07/2012 - 19:27 | 2686154 Umh
Umh's picture

People who get refunds every year usually file before April.

Tue, 08/07/2012 - 15:39 | 2685593 Hype Alert
Hype Alert's picture

Let me see.  Wait..  BULLISH!

 

This must mean people are paying down their credit.  Yeah, that's it.

Tue, 08/07/2012 - 15:53 | 2685627 mayhem_korner
mayhem_korner's picture

 

 

Sort of.  It's more like they're taking a second mortgage out on their cars to pay down their Macy's cards.  So those Michael Kohrs outfits treading down the street are collateralized by an underwater Chevy Impala.  It's all good, tho...

Tue, 08/07/2012 - 18:19 | 2685972 Shizzmoney
Shizzmoney's picture

They are paying down their credit b/c they realize that a) corporate serfdom sucks, and the only way you have any type of "life leverage" is if you are free from committments from debts and children (which will both continue to decline), and they are freeing themselves from this because b) they realize, the job market is shitty, and only gonna get shittier.  People may not have their jobs by this time next year, if they are lucky to have one.

What's funny is that the consumer actually has morals, and understands the importance of holding true to their debts.  The people that run them, however (govt, corporates, banks), who hold a gun to our head and even chide us for not doing so (like the Republicans)........actually are realy good at defaulting on their debts. 

Basically, we need a "100th Monkey" moment of a tax/debt payment strike to get any leeway back from Congress.  Voting ain't gonna do it.  Only by voting with our feet and wallets nad will, will this be done.  Gandhi really set the way wit hthe non-violent path, because it really is the best way because you lose less lives AND you hurt your opponent more.  However, it is harder than the violent way, because it requires full and complete participation.

And unfortunately for America, it is inhabited, and run........by the most surly, selfish, and self-serving motherfuckers the world has ever known.

Tue, 08/07/2012 - 15:40 | 2685594 q99x2
q99x2's picture

They paid for the 400,000,000 rounds of DHS ammo and drones to kill us with on credit.

Tue, 08/07/2012 - 15:44 | 2685604 Hype Alert
Hype Alert's picture

Don't forget the reinforced checkpoint stations.

Tue, 08/07/2012 - 15:52 | 2685628 Dr. Engali
Dr. Engali's picture

And now add on an additional purchase of .357 rounds they are looking to purchase......for target practice of course.

 

Pssssttt...you're the target.

Tue, 08/07/2012 - 15:46 | 2685610 john_connor
john_connor's picture

Bullish.  Blindly buy all sell side reco's!

Tue, 08/07/2012 - 15:48 | 2685612 death_to_fed_tyranny
death_to_fed_tyranny's picture

Here is what you do to kill the banks. Run up your Credit Card(unsecured debt) Stop paying. When you receive dunning letter,send out debt validation letter. They will NEVER reply. They can't validate the debt. The Credit Card Companies never lost a dime thanks to fractional reserve lending and the power of monetization. FUCK EM!

http://www.freedompool.org/unsecured-debt.html

AWAKEN!

Tue, 08/07/2012 - 15:57 | 2685639 mayhem_korner
mayhem_korner's picture

 

 

Maybe they can't validate the debt...but they can get Uncle Benny on the batphone and have him rehypothecate the losses back to the taxpaying public's grandchildren through more easing. 

Since you seem especially irresponsible, perhaps you could run up your credit card by purchasing lots of gold bullion...which I'll gladly store for you at no charge.

Tue, 08/07/2012 - 16:06 | 2685667 SemperFord
SemperFord's picture

"Maybe they can't validate the debt...but they can get Uncle Benny on the batphone and have him rehypothecate the losses back to the taxpaying public's grandchildren through more easing. "

 

I used to think that way but this debt will never be paid off, its FIAT money, it can and will be printed. Plus, if some guy can run up a credit card and buy gold or silver or crack for that matter and fails to pay, good for him I say. The politicians and bankers get away with it, so I now am ok witht he average Joe playing their game of running up debt and not paying, yes it's cynical/immoral but it's a way to use the system that gladly takes as much from you as they can.

Tue, 08/07/2012 - 16:24 | 2685707 mayhem_korner
mayhem_korner's picture

 

 

And all that printing will ultimately deflate asset values.  So those of us who actually have unlevered assets don't appreciate the irresponsible folks - individuals or elected - who devalue everything be taking on debts with no intent to ever pay.  Joining the game doesn't get you a badge in my book.

Tue, 08/07/2012 - 17:03 | 2685759 emersonreturn
emersonreturn's picture

mayhem, perhaps the point is the inevitable end? if we, the serfs and ill-abused, refuse to pay our taxes and/or our cards, perhaps we may regain some power?  the gov't and banks rely upon the diligence and morality of the great disabused.  even though you are solvent and in good stead, the world around you is not, and that disease impacts your well being and the steadiness of your grandchildren.  you are of course right, it is immoral to refuse to repay a debt or taxes but shall we continue to simply wait for TPTB to be fed and full and finished and allow us then to pick up the tab and begin the heavy business of washing dishes and sweeping up the debrs?  i do not deny your truth or the moral quandry but it seems to me one of those points in time when many pause and begin to indulge in the big think...

Tue, 08/07/2012 - 17:01 | 2685794 SemperFord
SemperFord's picture

MK, I agree with your point but some people know that DC and the Bankers are going to do it even if the working class does not, so by joining you will help bring the system down, kind of like Emerson stated.

Tue, 08/07/2012 - 17:27 | 2685852 mayhem_korner
mayhem_korner's picture

 

 

I recognize the urge for folks to precipitate the collapse.  I'm not convinced that all of the chest-beaters are well-prepared for the consequences.  The 'thrill of victory' will quickly give way to reality of the consequences.

Tue, 08/07/2012 - 16:18 | 2685689 NotApplicable
NotApplicable's picture

Interesting mix of ideologies.

How does one go about being responsible for the fraud of others?

Your logic only works if someone loans you something. Reality, meanwhile, displays that instead of loaning you something of their own, they stole the purchasing power from everyone, merely making it look like a loan.

What's the original Fed Note worth today? Somewhere between two and five cents, depending on how you measure.

Failure to support the monopolized trade of stolen goods can hardly be considered a reason worth calling someone irresponsible over.

Tue, 08/07/2012 - 16:39 | 2685746 mayhem_korner
mayhem_korner's picture

 

 

Some of us don't have any debt, and so the wealth dilution we are made to suffer is a function of those who have fed the dilution of money by not repaying their debts and/or encouraging others to do the same.

I see both of those as irresponsible and fail to see any mixed signals in that, NA. 

Tue, 08/07/2012 - 17:39 | 2685877 NotApplicable
NotApplicable's picture

Your point is well taken, and I agree with its intent.

Just to pick nits though, the dilution is fed by the debt money that was not loaned, but rather, created upon signing a debt instrument. You'll only stop the theft of your wealth by stopping the dilution that occurs when "loans" are taken out.

For example, even if I pay my debts off fully, I've still stolen your wealth, as I paid in an ever depreciating currency.

Meanwhile, death_to_fed_tyranny is laying out the ONLY bottom-up approach that can actually put an end to this scam. Now, while it may appear irresponsible from the perspective of living in a world of scarcity (borrowing and returning real things), we're talking about the world of fiat IOU money.

Tue, 08/07/2012 - 16:00 | 2685648 eclectic syncretist
eclectic syncretist's picture

Another way to vote against banks and polical ideologies is just to click their links in Zero Hedge and other sites you like.  That way you get them where it hurts them most (their wallets) and you help out Zero Hedge and your preferred sites.  It's everyone's chance to play Robin Hood!

An organized effort of a few million clicks per day on a target bank's internet ads could take them down faster than OWS ever could have.

Tue, 08/07/2012 - 16:08 | 2685671 SemperFord
SemperFord's picture

Helps Zero Hedge, does nto hurt banks, they get almost free money.

Tue, 08/07/2012 - 16:17 | 2685687 Haager
Haager's picture

Oh, they get free money - to make money. They don't like to pay without getting something (more) back.

http://www.youtube.com/watch?v=YUhb0XII93I

Tue, 08/07/2012 - 16:06 | 2685666 Clark Bent
Clark Bent's picture

Bad idea. They will simply send you a letter stating that the debt is valid. The validation letter collectors send is merely a technical requirement of the fair debt collection practices act. A law that has no effect on the original creditor. They'll sure you, they'll win, and then they'll garnish your wages. 

Tue, 08/07/2012 - 16:14 | 2685679 SemperFord
SemperFord's picture

In reality, I used to be in charge of a debt settlement company(yes I know, money got me in, morals got me out) and after a while it goes to collections, the longer they wait the less the CC company will settle for, one can settle a $20,000 debt with about $2,000 sometimes. Very rarely are wages garnished, most of the time they settle for 1/3 of the debt. But you can't openly say you defrauded the credit cards though many clients did just that...like the banks did to them with TARP but then again that goes back to this imaginary debt which will never be paid back and so it's just the bankers getting free money, should have been a banker!!!

Tue, 08/07/2012 - 16:34 | 2685733 Deflating in Denver
Deflating in Denver's picture

Original creditors are not subject to the FDCPA, and don't have to send you a validation.

Tue, 08/07/2012 - 15:49 | 2685616 same old story
same old story's picture

Stocks going higher.  in greece the bank of greece will sell 6 billion in toxic debt to the greek banks who relay on the bank of greece for emergency cash.

 

All i know is the CP can kick and kick this can.  seems only they know the end game

Tue, 08/07/2012 - 15:56 | 2685634 eclectic syncretist
eclectic syncretist's picture

Seems to me stocks are at the edge of a precipice and have been there for too long.

The can kicking will not prevent the collapse they are creating forever. 

Tue, 08/07/2012 - 16:04 | 2685657 adr
adr's picture

Eventually you can't fake earnings anymore. Sooner or later the retailers can't finance the purchase of the inventory that allows the EPS fakeout. When the inventory no longer has anywhere to go, someone will eat it. That day is coming very soon.

A slowdown in China takes 8-14 months to show up in America. The big retailers are buying Spring 2013 right now, and it isn't pretty. The spring 2012 Chinese slowdown will appear at retail this holiday. The early estimate based on the buys for the holiday is that there will be at least 40% less inventory on store shelves, than last year.

Tue, 08/07/2012 - 15:57 | 2685636 Cognitive Dissonance
Cognitive Dissonance's picture

Lenina Huxley: "I find this lack of stimulus to be truly disappointing, don't you think?"

http://en.wikipedia.org/wiki/Demolition_Man_(film)

Tue, 08/07/2012 - 16:02 | 2685654 mayhem_korner
mayhem_korner's picture

 

 

The nouveau phrase is "stimulus interruptis"

Tue, 08/07/2012 - 15:59 | 2685647 adr
adr's picture

Feels like right before the past few crashes. The stock market flying because corporations are beating EPS like mad. Everyone will receive boatloads of profit from somewhere. People are buying cars like crazy taking advantage of loose credit. Speculators are bidding up the price of every commodity and real estate speculators are buying up every property they can get their hands on to flip for a profit.

Every single mistake from the past 15 years is being made, concentrated into one year.

Look at fucking Fossil today. Up 31% because the company beat a massively lowered EPS estimate. On strong sales in China. Haha China, really? How about strong sales in accounting books a flambe.

 

All I know is that I'm not making more money this year, but a whole heck of a lot more is going out to pay for even less than I bought last year.

Me along with millions of others. But I guess that is just as bullish as it was in 2007. Wall Street is always last to get the real news.

Tue, 08/07/2012 - 16:05 | 2685659 busted by the b...
busted by the bailout's picture

Possiblility of recession got you down?  Fearful for the future of an economy reliant on more and more debt?

Never fear!  We got paper and we got ink!  And most important, we got a man who knows how to use 'em!

We don't need no stinkin' gold!

Tue, 08/07/2012 - 16:08 | 2685672 caimen garou
caimen garou's picture

if I dont have the cash to buy it i dont need it!

Tue, 08/07/2012 - 16:19 | 2685693 monopoly
monopoly's picture

I just do not understand why anyone would take out a loan for anything anymore with the exception of a home, or a vehicle to get to work. Lets get back to a cash society. That means you save for what you want or need, pay for it at point of sale and enjoy it, because you own it. Our entire mentality of ME NOW has to change. Who needs these broken banks that fucked so many people over and over. By taking on credit you keep these scum in business. And we know who each and every one of them are. It will take a long time but we are capable of change. And the Fed is giving advice on financial matters to the people. Is that now amazing. What a crock of shit. The same Fed that gave us the tech bubble, the internet bubble, the housing bubble and the current financial crisis, destroying our currency and penalizing Seniors and baby boomers, because they were stupid enough to save for their retirement.....Is giving financial advice.

Nothing more to say. 

Tue, 08/07/2012 - 16:55 | 2685780 Lednbrass
Lednbrass's picture

Any seniors and boomers are being penalized because they spent their lives asleep while the world around them was fueled on taking advance paycheck loans against the future earnings of children and those not even born- and took credit for that world as being the result of their own cleverness and industry isntead of recognizing that they only stole from the future. They believed that they could have both guns and butter in whatever quantities they wanted by virtue of being the good ol' USA and did not care at all about the mechanisms that gave them that.

Reality is about to intrude and I have scant sympathy for those who willingly chose to live in a dream. They are not victims, they made their choice collectively and now the consequences are looming. They are going to be screwed alright, but still far less than those who are young now.

Tue, 08/07/2012 - 16:49 | 2685768 TwoJacks
TwoJacks's picture

it's me. I did it.  I stopped using my credit card and paying off the balance each month. i'm all cash now for as many transactions as possible. this revolving credit thing should be back to normal next month, but not from my efforts. have a nice day

Tue, 08/07/2012 - 19:44 | 2686194 Umh
Umh's picture

I will keep using their "free" money as long as there is no discount for cash. I pay for most purchases with cash. I like my privacy to much to sign or PIN for petty purchases. I use credit for things that cost more than I'm carrying and pay it off every month. I will not use a debit card anywhere except my banks ATM. If someone hacks into your bank account it can be a real mess to straighten out since your real payments will bounce. If they hack your credit card you simply have to tell the card company you didn't make the charge.

Tue, 08/07/2012 - 19:46 | 2686199 valley chick
valley chick's picture

and this is the time people vacation. First thing that comes to mind...staycation!!

Tue, 08/07/2012 - 20:24 | 2686293 HungrySeagull
HungrySeagull's picture

We're pleased to inform you that your credit limit is exceeded.

See attached for your fees due and payable on reciept.

 

One bank to pay bills only, another to spend on shit.

Tue, 08/07/2012 - 21:46 | 2686464 mirac
mirac's picture

How is the hell does there exist a "Government" column in Consumer Credit??????

Sat, 08/11/2012 - 19:54 | 2698006 rjs
rjs's picture

student loans

Wed, 08/08/2012 - 05:33 | 2686976 145
145's picture

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Sat, 08/11/2012 - 19:54 | 2698005 rjs
rjs's picture

your chart doesnt look like "Revolving Credit Had Biggest Contraction Since April 2011"

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