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Consumer Credit Rises As Uncle Sam Funds More Subprime Car And Student Loans; Revolving Credit Drops

Tyler Durden's picture




 

Superficially, it was all smiles following the announcement of the September consumer credit number which rose by $7.4 billion on a seasonally adjusted basis, on expectations of $5.2 billion (and down from the revised $9.7 billion borrowed in August). However a quick look under the surface reveals the same old trickery we have grown to know and love: revolving credit declined by $627 million, while the entire growth was in Non-revolving borrowing, which rose by $8 billion. What does non-revolving credit fund? Why auto loans (read subprime GM car loans) and student loans of course, the latter being the very same loans which even the president now is saying have to be reduced. As for the former, the G.19 now no longer even bother to report such data as Loan to Value, Interest Rates, Maturity and Amount Financed: analysts are left to imagine the best possible outcome. And just to confirm where consumer credit in 2011 has come from, of the $32 billion in credit issued YTD, $89.7 billion of it comes from the US government. The only other positive source of credit in 2011, for the whopping amount of $1 billion are savings institutions. Every other traditional source of credit is now... a drain.

Monthly consumer credit by revolving and non-revolving.

Sources of Credit monthly:

and total YTD:

 

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Mon, 11/07/2011 - 18:07 | 1854824 LawsofPhysics
LawsofPhysics's picture

So, no liquidity problem then?  I am confused.  Just out of curiosity, was there ever a period in history when the largest part of that graph was actually savings?  In particular, saving of those with currency backed by gold.

Mon, 11/07/2011 - 22:47 | 1855362 cynicalskeptic
cynicalskeptic's picture

That's the miracle of the modern financial system.   You can charge interest on debt funded by money created out of thin air (or random electrons).   No need for any REAL money backed by meaningless metals or actually earned by the labor of actual people.  

No real liquidity problem either- as long as money can be created without limits.

Thu, 11/10/2011 - 10:16 | 1865668 dizzyfingers
dizzyfingers's picture

Probably, before central banks and central bankers.

Mon, 11/07/2011 - 17:58 | 1854830 mynhair
mynhair's picture

Can I sell my diplomas and save some starving moron the trouble of getting edicated?

Or is it edijumacated.....

Mon, 11/07/2011 - 18:01 | 1854842 deez nutz
deez nutz's picture

...sell the bastard a Chevy too, he deserves it.

Mon, 11/07/2011 - 18:07 | 1854861 infinity8
infinity8's picture

probably gone in 60 seconds on craigslist.

Mon, 11/07/2011 - 18:02 | 1854845 mynhair
mynhair's picture

" of the $32 billion in credit issued YTD, $89.7 billion of it comes from the US government"

Just luv math.

Pesos for peons!

Mon, 11/07/2011 - 18:17 | 1854885 MarketTruth
MarketTruth's picture

Can the US Gov go deeper into debt?

YES WE CAN!

Can the US Gov owe more than any other country?

YES WE CAN!

Can the US Gov manipulate interest rates?

NO WE CAN'T (because that job is the privately owned central bankers who of course own the US Gov).. so YES WE CAN!?!?! 

Mon, 11/07/2011 - 19:49 | 1855094 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

Gross is not net.

Mon, 11/07/2011 - 18:06 | 1854855 Bunga Bunga
Bunga Bunga's picture

Almost like in the good old days: Buy a house and get a car for free.

 

 

Mon, 11/07/2011 - 18:10 | 1854871 Ned Zeppelin
Ned Zeppelin's picture

Credit? You said It!

No Phone? No Loan!

 

Mon, 11/07/2011 - 18:12 | 1854876 BennyBoy
BennyBoy's picture

We need more debt! I am manging the world's biggest debt based ponzi, er, monetary system.

I like these numbers: $32 billion in credit issued YTD, $89.7 billion of it comes from the US government.

Now that's credit growth the way Goldman ordered it!

Mon, 11/07/2011 - 18:14 | 1854877 youngman
youngman's picture

And Obama will allow defaults on those student loans.....for votes...you just watch...executive order coming up...

Thu, 11/10/2011 - 10:14 | 1865656 dizzyfingers
dizzyfingers's picture

Under the new student loan deal, they can pay back $1,000 per year for 20 years and the rest is forgiven -- no matter how big the original loan. So much for responsibility. So much for contract law.

Mon, 11/07/2011 - 18:21 | 1854901 agent default
agent default's picture

Student loans... the next shoe to drop.

Mon, 11/07/2011 - 18:48 | 1854973 High Plains Drifter
High Plains Drifter's picture

obama is going to give them a break on that one and make everyone else pay for it............

Mon, 11/07/2011 - 21:38 | 1855277 dwdollar
dwdollar's picture

I doubt it. There's no way that plan will fly longterm. Education will be sacrificed before SS and other old fuck programs.

Thu, 11/10/2011 - 10:11 | 1865646 dizzyfingers
dizzyfingers's picture

The whole 'stick taxpayers with student loan' thing was in the Obama-care legislation. http://en.wikipedia.org/wiki/Health_Care_and_Education_Reconciliation_Act_of_2010

OB must have figured out that Obama-care's DOA.

Thu, 11/10/2011 - 10:08 | 1865634 dizzyfingers
Mon, 11/07/2011 - 18:40 | 1854949 High Plains Drifter
High Plains Drifter's picture

if you have a job, we will get you a new car................its biz as usual in the sheepdom.........

Mon, 11/07/2011 - 18:52 | 1854987 navy62802
navy62802's picture

Should I feel guilty as I watch my savings grow and my gold accumulate?

Mon, 11/07/2011 - 19:04 | 1855011 slewie the pi-rat
slewie the pi-rat's picture

this is pretty funny, tho!

i was trying to understand wtf this means when i had this thought:

they do this to geese to make pate, right?

 

Mon, 11/07/2011 - 19:58 | 1855110 Spastica Rex
Spastica Rex's picture

Nearly all "foie gras" is in reality "foie gras de canard" these days. Like over 90%, I think.

But yes - force fed goose/duck = same difference!

Tue, 11/08/2011 - 01:05 | 1855613 Flakmeister
Flakmeister's picture

You can make the argument that Foie Gras d'Oie is ever so slightly better...

 

Thu, 11/10/2011 - 10:02 | 1865598 dizzyfingers
dizzyfingers's picture

Pate is mealoaf. But they're eating us alive, that's for sure.

Mon, 11/07/2011 - 19:15 | 1855033 ThisIsBob
ThisIsBob's picture

OK, so who are the players in student loans?  Anybody we know?

Mon, 11/07/2011 - 22:06 | 1855309 navy62802
navy62802's picture

I can name you a big one ... the US government. And SURPRISE!!! They failed miserably once again. Go figure. While there are other pawns in the game, the government is the driving force behind this madness.

Thu, 11/10/2011 - 09:57 | 1865571 dizzyfingers
dizzyfingers's picture

Not exactly. It's the central banks.

http://www.abjpress.com/htwpage.html

Tue, 11/08/2011 - 01:07 | 1855615 foofoojin
foofoojin's picture

McGrawl-Hill. parent company of S and P

Sallie May.  AKA the devil.

 

Mon, 11/07/2011 - 19:22 | 1855044 Spastica Rex
Spastica Rex's picture

Can I get a subprime loan on an Escalade? My family of four finally has one full time income (wife is teaching at a Catholic school). We have no other debt, and we only eat into our savings a little bit each month to pay for rent, food, health insurance, and other necessities.

I would like to do my part in supporting our economy.

Mon, 11/07/2011 - 20:03 | 1855120 El Gordo
El Gordo's picture

Just cut back a little on the cell phone bill and the tats at the family tattoo parlor and it should be no problem to finance that new Caddy.

Mon, 11/07/2011 - 19:46 | 1855090 itstippy
itstippy's picture

Could this type of data delay implementation of the Fed's exit plan?

Mon, 11/07/2011 - 20:52 | 1855214 s2man
s2man's picture

Wait.  Can't I get a sub-prime loan on a Chrysler, too?  Did the gov stop subsidizing them?

Mon, 11/07/2011 - 21:49 | 1855288 Snakeeyes
Snakeeyes's picture
Consumer Credit Rises In September By More Than Reported, But Student Loans and Federal Government Is The Fastest Growing Segment

http://confoundedinterest.wordpress.com/

Look at the charts. If we subtract student loans and subprime gov't loan, CONSUMER CREDIT GROWTH HAS BEEN NEGATIVE SINCE 2009!!!!!!

 

Thu, 11/10/2011 - 09:55 | 1865554 dizzyfingers
dizzyfingers's picture

RESIST!

Don'tborrow, don't spend, don't own real estate, don't work, don't pay taxes.

Mon, 11/07/2011 - 22:09 | 1855315 navy62802
navy62802's picture

And by the way, student loan debt should be dischargeable in bankruptcy. It is unconscionable to me that legislation was passed making student loan debt non-dischargeable. In fact, your social security benefits will be garnished in order to pay off your outstanding student loans. How about them apples? I wonder who got paid off by the big banks to push that legislation through.

Thu, 11/10/2011 - 09:53 | 1865553 dizzyfingers
dizzyfingers's picture

...you wouldn't mean the body that makes the laws would you? Congress....?

Tue, 11/08/2011 - 00:05 | 1855509 Dr. Nancy
Dr. Nancy's picture

 

All that's happening is predictable, as there are 7 stages that every major economy goes through. Those who know how it works profit & massive wealth is transferred to them. Several months ago I learned this information from a millionaire whose site I found & am sharing it with everyone I know.

His free video

"How To Create Incredible Wealth in Today's Economic Crisis"

is at:

http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...

Hope this info helps everyone as much as it has me.

Dr. Nancy

 

Tue, 11/08/2011 - 00:21 | 1855531 knowless
Tue, 11/08/2011 - 00:32 | 1855556 AndrewCostello
AndrewCostello's picture

This is typical Americans - they just cannot live within their means and save.  All they know how to do is spend.

When they were asked to pay their mortgages, they walked away and the same will happen with auto loans and student loans.  They will just print more money to cover up the defaults and make the problem bigger and bigger until it all collapses.

 

Get on the winning team.

http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref

Thu, 11/10/2011 - 09:50 | 1865536 dizzyfingers
dizzyfingers's picture

Costello:

Read HOW THE WORLD REALLY WORKS. It IS a plot.

 

Tue, 11/08/2011 - 00:41 | 1855572 MSimon
MSimon's picture

of the $32 billion in credit issued YTD, $89.7 billion of it comes from the US government.

Bummer. About 3X as much credit issued as asked. 

Tue, 11/08/2011 - 03:18 | 1855710 Kickaha
Kickaha's picture

Student loan programs exist solely for the benefit of diploma and certificate mills.  The "schools" get the money and graduate people who have little chance of finding a job.  Hey, learn how to drive the big rigs!  Learn medical transcription!  Go to law school!

Under the pretext of learning a career, the owners of the schools get wealthy, and the banks collect on government loan guarantees, while unemployed graduates drown in a lifetime of unpayable debt.

Getting what looks like free money to go to school eliminates any need to do a personal cost/benefit analysis regarding the project.  Another boondoggle guaranteed to result in a complete misallocation of precious capital.

Thu, 11/10/2011 - 09:48 | 1865524 dizzyfingers
dizzyfingers's picture

 

Kickaha:

No, for the central banks and banksters.

Tue, 11/08/2011 - 09:51 | 1856055 happydude
happydude's picture
We’ve had enough of the official mantra: Work more, enjoy less, pollute more, eat toxic foods and suffer illnesses, all for the sake of increasing the GDP. Why not develop ways to work less and enjoy it more; spend more time with our friends and families; consume, pollute, destroy and owe less; and live better, longer and more meaningfully? To do all this, we need fresh solutions that engage America’s people in redefining goals for the economy (what we want from it) as opposed to the economy’s goals (what it demands from us).   An economy based on a high quality of life that makes people happy may sound revolutionary, Thomas Jefferson enshrined the pursuit of happiness  as a human right when he drafted our Declaration of Independence. Jefferson emphasized that America’s government was, “to secure the greatest degree of happiness possible for the general mass of those associated under it.” Likewise, the Constitution of the United States declares that government is to promote, among other things, the general welfare of the people. r u happy yet? 
Thu, 11/10/2011 - 09:47 | 1865520 dizzyfingers
dizzyfingers's picture

The FED's most recent BANKRUPT AMERICA program.

Tue, 04/10/2012 - 08:32 | 2330709 leo_21
leo_21's picture

Nice effort, very informative, this will help me to complete my task.
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