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Guest Post: Consumer Credit And The American Conundrum

Tyler Durden's picture


Submitted by Lance Roberts of StreetTalk Advisors

Consumer Credit And The American Conundrum

What to do?  This is not as an innocuous question as one might think.  For most American families, who have to balance their living standards to their income, face this conundrum each and every month.  Today, more than ever, the walk to the end of the driveway has become a dreaded thing as bills loom large in the dark crevices of the mailbox.  What to do?

The conundrum exists because there is not enough money to cover the costs of the current living standard.  The average family of four have few choices available to them.  The burden of debt that was accumulated during the credit boom can't simply be disposed of.  Many can't sell their house because 1 in 4 homes are worth less than what they owe.  There is no ability to substantially increase disposable incomes because of a weak employment environment and deflationary wage pressures.  Despite the mainstream spin on recent statistical economic improvements the burdens on the average American family are increasing.  Nothing brought this to light more than yesterday's release of consumer credit data which rose $19 billion following a $20 billion increase in November. 

However, after the release yesterday the headlines were replete with commentators talking about the "end of the consumer deleveraging cycle".   Joe Weisenthal wrote yesterday at Business Insider "It's hard to think that the economy is going into any kind of recession with numbers like these. For the second straight month we just got a HUGE number on consumer credit.  Consumer credit expanded by $19 billion in December. That's far more than the $7 billion that was expected by economists.  Revolving consumer credit (credit cards) grew by $4.1 billion sequentially, and is basically flat from last year again (up barely).

One more point on this: A lot of people think that US consumer has too much debt, and that a big number here is 'bad' and we could imagine that being true. But if we're talking about cycles, and whether the economy is in rebound or recession mode, re-expanding credit is OBVIOUSLY what you want to see."

consumer-spending-wages-020812Under more normal circumstances Joe would absolutely be correct.  Rising consumer credit means more consumption which leads to stronger economic growth.  Let me explain.  Individuals go to work to produce a good or service for which they are paid a finite amount of money for.  With that income they pay taxes which leaves them with discretionary income from which to live on.  Pay the rent, utilities, insurance and healthcare, food, clothes and put gas in the car and that pretty much consumes the majority of the paycheck. 

Therefore, in the past, if they wanted to expand their consumption beyond the constraint of incomes they turned to credit in order to leverage their consumptive purchasing power. Steadily declining interest rates and lax lending standards put excess credit in the hands of every American.  (Seriously, my dog Jake got a Visa in 1999 with a $5000 credit limit)  This is why during the 80's and 90's, as the ease of credit permeated its way through the system, the standard of living rose in America even while economic growth rate slowed in America along with incomes.

Therefore, as the gap between the "desired" living standard and disposable income expanded it led to a decrease in the personal savings rates and increase in leverage.  It is a simple function of math. 

pce-consumerdebt-020812Today, the situation is quite different and a harbinger of potentially bigger problems ahead.  The consumer is no longer turning to credit to leverage UP consumption - they are turning to credit to maintain their current living needs. 

Take a look at the chart of personal consumption expenditures (PCE) versus total consumer credit.  Notice in the past year as consumer credit rose you saw an increase in PCE.  In the last two months consumer credit has exploded higher but there has been virtually NO increase in PCE levels on a month over month basis.  Retail sales during the Christmas shopping season we disappointing and this was even with a large decrease in gasoline prices.

This situation becomes even more apparent when we begin to look at the longer term trends of real disposable incomes, consumer credit and personal saving rates. 

debt-consumerdebt-incomes-020812Most of the deleveraging process that has been occurring up to this point has NOT been voluntary.  Banks have been cutting off excess credit lines, consumers have been defaulting on debt, mortgage foreclosures, and personal bankruptcies.  Consumers, on the other hand, are struggling just to make ends meet and are in reality doing very little in terms of voluntary debt reduction.  As incomes have decreased over the past two years - the inflationary pressures in food, energy, medical and utilities have consumed more of that declining wage base.  This is why today we have 1 out of every 2 Americans on some form of governmental assistance, more than 47 million people on food stamps and transfer receipts making up more than 35% of personal incomes.  It is hard to make the claim that the economy is on a fast track to recovery with statistics like that.  That is why the recent increases in consumer debt are disturbing.  The rise in NOT about increasing consumption by buying more "stuff" it is about just about being able to purchase the same amount of "stuff" to maintain the current standard of living.

Yes, the economic data has certainly shown some signs of picking up as of late.  However, if you go ask your neighbor, co-worker or small business on the corner the answer you get back will probably surprise you.  The struggle to survive from one paycheck to the next  is a reality for most American's today.  It is very reminiscent of 1980 when Dolly Parton penned the lyrics for the movie "9 to 5" to wit:

Workin' nine to five
What a way to make a livin'
Barely gettin' by
It's all takin' and no givin'
They just use your mind
And you never get the credit
It's enough to drive you
Crazy if you let it

Nine to five, yeah
They got you where they want you
There's a better life
And you think about it, don't you?
It's a rich man's game
No matter what they call it
And you spend your life
Puttin' money in his wallet

Those words will certainly resonate for those of the age 16-24, who weren't even alive when the movie was made, that are part of Occupy Wall Street and are protesting the "rich man" because they feel oppressed by the system.  For that age group 1 in 4 are unemployed and they are living back home with parents.   In turn, parents are now part of the "sandwich generation" that are caught between taking care of kids and elderly parents.  The rise in medical costs and healthcare goes unabated consuming more of their incomes.  The deleveraging cycle has only likely been put temporarily on hold.  The recent increases in consumer debt without corresponding increases in personal consumption are concerning to say the least. 

Hopefully, the recent upticks in the economic data are more than just temporary bounces post the economic crisis of last summer.  Hopefully, the recent improvements in employment, while mostly temporary hires, will translate into higher incomes in the future.  Hopefully, the recession in the Eurozone, which accounts for about 1/5th of exports and incomes to U.S. corporations, will not negatively impact the U.S..  Hopefully, the U.S. can begin to reduce to long term deficits and get the country back onto a sustainable growth trend.

That is an awful lot of hoping.


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Wed, 02/08/2012 - 16:25 | 2139073 DCFusor
DCFusor's picture

Slow, aren't we - this hasn't just's been going on for a long time now - and that "money pulled out of the market and sitting on the sidelines" ain't - it paid for groceries and gasoline, just ask any neighbor honest enough to tell you the truth.

Wed, 02/08/2012 - 16:34 | 2139110 Sharks with las...
Sharks with laser beams's picture

We are going up from here because it can't get any worse than that:

Wed, 02/08/2012 - 16:57 | 2139177 MillionDollarBonus_
MillionDollarBonus_'s picture

If the American consumer refuses spend, the only solution is for the government to pursue AGGRESSIVE fiscal stimulus programs. Bernanke becoming increasingly accommodative to this end, so congress has NO EXCUSE. We need decisive and meaningful fiscal stimulus NOW to boost aggregate demand and fuel our service economy. 


Wed, 02/08/2012 - 17:01 | 2139201 Vincent Vega
Vincent Vega's picture

Your shtick use to be kind of funny. It has become very boring.

Wed, 02/08/2012 - 21:48 | 2140171 nope-1004
nope-1004's picture

If you can't afford it, finance it!

Clearly no one can afford anything.  Too bad I can't short my indebted pig neighbor.


Wed, 02/08/2012 - 17:21 | 2139273 Clueless Economist
Clueless Economist's picture that you Krugman? bearded creep

Wed, 02/08/2012 - 22:53 | 2140341 zerotohero
zerotohero's picture

W.J. Whoopee your the man of the hour.

Thu, 02/09/2012 - 08:24 | 2141007 DrunkenMonkey
DrunkenMonkey's picture

Short of throwing bails of cash out of airships what are you suggesting ?

Years of 'accommodative' fiscal and monetary policy (in the face of declining 'real' wages) have brought us to this stage.

The period where we could afford the things we bought out of current earnings is long behind us, and wage increases that kept pace with inflation (in the things we need to survive, not ipads) were replaced by ever easier credit leaving us all in major debt.

So what is it ? 50 year mortgages ? Debts that revert to our children upon our deaths ? Or more money printing to keep oiling the squeeky wheel ?

Surely it is obvious that this is unsustainable, and will therefore come crashing down ?

Please, enough with the one-day-at-a-time thinking, it is starting to look like the Treasury is run by NA / AA members.

Wed, 02/08/2012 - 17:01 | 2139203 BlackholeDivestment
BlackholeDivestment's picture

DCFusor, that's called ''feeding the beast''. Lol

Wed, 02/08/2012 - 19:20 | 2139719 Newtons Lawyer
Newtons Lawyer's picture

I don't recall seeing it mentioned in the last couple of years that the interest rates on revolving debt are significantly higher than 4-5 years ago.  Banksters jacked rates from mid single digits to 20% in many cases and doubled or tripled minimum payments.  The only deleveraging going on is defaults.  Meanwhile the TBTF banks are given free reign to rape and pillage just so they can make an effort to become solvent.  Hopefully they don't succeed.

Wed, 02/08/2012 - 16:29 | 2139081 BLOTTO
BLOTTO's picture

Gordon Gekko: The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It's bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you're not naive enough to think we're living in a democracy, are you buddy? It's the free market. And you're a part of it. You've got that killer instinct. Stick around pal, I've still got a lot to teach you.

1987~Wall Street~

Wed, 02/08/2012 - 16:30 | 2139090 The trend is yo...
The trend is your friend's picture

One of my ALL TIME favorite lines of any movie

Wed, 02/08/2012 - 16:33 | 2139103 HungrySeagull
HungrySeagull's picture

Wallstreet. Ah yea. Right up there with Hudsucker Proxy for me.

Wed, 02/08/2012 - 17:05 | 2139220 BlackholeDivestment
BlackholeDivestment's picture

...and Catch 22.

Wed, 02/08/2012 - 17:14 | 2139251 John Law Lives
John Law Lives's picture

Ditto that.  Michael Douglas was born to play that charcter.

Wed, 02/08/2012 - 19:14 | 2139701 LooseLee
LooseLee's picture

You are nothing more than a"wanna-be" man. You create nothing and in the end will receive nothing. You live off of the 'ignorance' of others. A man like me will annihilate you in any physical or intellectual exercise. I can't wait until this 'country boy' meets up with a 'city boy' like you real soon...Calling all 'Financials'.....let's see what you have to hide behind when confronted with a 'ringer' you never dreamed existed...

Wed, 02/08/2012 - 16:27 | 2139083 The trend is yo...
The trend is your friend's picture

Start Spreadin the news thiers HOPIUM today.....i want to be a part of it....Hopium.....hopium

Wed, 02/08/2012 - 21:21 | 2140099 TheMerryPrankster
TheMerryPrankster's picture

I think you're pipe is going out. Better find your BIC.

Wed, 02/08/2012 - 16:28 | 2139084 Irish66
Irish66's picture

OT>  All this guest posts, do they just come to Zerohedge or out to other people?

If these posts are hitting a huge population, why is anyone in the market?


Wed, 02/08/2012 - 16:32 | 2139101 The trend is yo...
The trend is your friend's picture


You are a part of a small group of people.  Look at the average reads on the articles. It Averages 6-7k reads from a wordwide audience.  if more people read ZH the market would crash 

Wed, 02/08/2012 - 16:35 | 2139114 Irish66
Irish66's picture

So my question is then these articles are just written for Zero?

Wed, 02/08/2012 - 16:42 | 2139138 azzhatter
azzhatter's picture

Most are ZH but some are from outside sources. ZH is not a news aggregator. There's some really smart Tyler dude(s) that write this stuff

Sat, 02/11/2012 - 09:52 | 2149004 Orly
Orly's picture

Most of the articles are submitted with permissions from outside sources.  Lance Roberts is a financial advisor in Houston, Texas...and a very nice fellow, too.

He has a radio show on KSEV radio that airs at 6pm central on weeknights.


Wed, 02/08/2012 - 16:38 | 2139124 earleflorida
earleflorida's picture

we're almost ready to go beyond 50k reads shortly, what bothers me the most about this,... is having to read 1200+/+ comments per post

go ZH


Wed, 02/08/2012 - 16:42 | 2139127 baby_BLYTHE
baby_BLYTHE's picture

believe it or not there are people out there that actually believe another market crash is an impossibility going forward due to QE. Back before the invitition of computers QE would have meant actual money printing and physical delivery of paper currency to banks and primary dealers. Imagine what that would do for inflation expectations today? No way the FED would get away ZIRPing and printing 4eva.

Wed, 02/08/2012 - 16:30 | 2139093 carbonmutant
carbonmutant's picture

"The consumer is no longer turning to credit to leverage UP consumption - they are turning to credit to maintain their current living needs."

In fact they're moving from credit cards to cellphones  - NFC

Wed, 02/08/2012 - 17:14 | 2139248 Agent P
Agent P's picture

Coming soon to a $300 smartphone (+$150/month phone plan) near you...trend moving toward people transacting in credit on a device they need credit to afford...kind of ironic, don't you think?


Wed, 02/08/2012 - 21:29 | 2140122 TheMerryPrankster
TheMerryPrankster's picture

Ironic or suicidal. Think of the data mining profile that can be built using GPS, credit card and the time server, time stamps.

They know what you bought, where you bought it, how much you bought, where you travel to, when you are awake and asleep, who you talk to, what you talk about and assorted other facts that only become evident when you mash all the data together and extrapolate.

How ironic, electronic handcuffs that you pay to wear, that pick your pockets and snitch you out. Some people line up around the block to be the first to own the latest model with the newest electronic hand cuffs. We are knee deep in dolts, submerged in clueless, drowning in stupidity.

What's next a gun that shoots you and then calls 911? There's an app for that.

Wed, 02/08/2012 - 16:30 | 2139094 pods
pods's picture

Why does the term "sustainable growth" make me laugh?

Laugh in a way like when you realize how fucked we really are.

And then wonder why everyone wants to go back to the same exact thing that got us here to begin with?


Wed, 02/08/2012 - 16:51 | 2139166 Scisco
Scisco's picture

For anyone that doesn't understand the joke, watch this. It is a very important concept to grasp.

Wed, 02/08/2012 - 22:54 | 2140351 zerotohero
zerotohero's picture


Wed, 02/08/2012 - 22:55 | 2140354 zerotohero
zerotohero's picture

Oh and another thing - here's a GROWTH idea for the public - GROW some balls and vote Ron Paul.

Wed, 02/08/2012 - 16:31 | 2139095 Shizzmoney
Shizzmoney's picture

Consumers are obviously betting that the Mayans were right about 2012.

And we all know who the big winners are for an impending Apocalypse - and it ain't Visa or American Express.

Wed, 02/08/2012 - 21:35 | 2140142 TheMerryPrankster
TheMerryPrankster's picture

The Mayans were right, the calendar does end in December, but on the 31st.

Silly old world, full of silly old people, repeating the same mistakes.

Day after day, year after year, generation after generation. We laugh cause we can't cry.

Budha sought eternal bliss in the belief it would allow him to die and not reincarnate. He wanted off the treadmill.

Wed, 02/08/2012 - 16:32 | 2139100 HungrySeagull
HungrySeagull's picture

Far too late now.

It would be easier to get a Camel through the Needle Eye than it is to simply say "Debt Jubiliee" and restart everything all over again.

Out with the old, in with the new.


It wont happen. If it is going to hit our young, it's already done through student loans that can never be repaid. Indeed if inflation takes hold regardless of what Ben wants or does not want, the Government might be forced to simply say "Forget it" to student loans.

And then tax every debtor according to the amount of debt that was written off.


On ZH recently there was a Greek Court that ruled a person with current bills beyond income can simply shed them.


The Nation has failed, yes failed to maintain the books for over a thousand days now. Vote this, spend that, give it all to whatever without a thought to the actual costs which are spiraling beyond what anyone in Congress will even speak publicly.

Forget about hoping. Just do.

We are somewhat breaking even as it stands now, having already made draconian choices and execute them no matter the cost, pain and stress.

No more debt. It's that simple.


And it is the little simple spark that burns a great forest.

Wed, 02/08/2012 - 16:32 | 2139104 Beam Me Up Scotty
Beam Me Up Scotty's picture

So a person should apply for all the credit cards you can, and max them out on gold and silver and declare bankruptcy?  If you didn't need any credit in the future, that might be the ticket.

Wed, 02/08/2012 - 16:45 | 2139137 TruthInSunshine
TruthInSunshine's picture

One doesn't need to declare BK, necessarily.

I had a client who was worth 8 figures (upper 8s, on paper at least - but paper counted back then) back in the mid 2000s, who, after basically losing it all, charged up his AMEX Black Card and some other premium cards to the hilt (I believe he charged in excess of 300k on multiple cards), and simply said "piss off" when they called him to harangue him about his non-payment.

By the time they got around to thinking about suing him for unpaid debt, they found that the line was a little bit too long, and the liens and judments were piled a little too deep, to have any real shot of success.

He then turned 'debt negotiations' into a game, for whatever reason, and got them to agree to a settlement of around anywhere from 12 to 16 cents on the dollar, before he let them know that he couldn't even afford that, and to go ahead and sue him.

Wed, 02/08/2012 - 16:57 | 2139186 niktamere
niktamere's picture

You're givin me ideas, my man

Wed, 02/08/2012 - 17:02 | 2139208 rayduh4life
rayduh4life's picture

The Donald would. 

Wed, 02/08/2012 - 16:32 | 2139105 GeneMarchbanks
GeneMarchbanks's picture

And that's just some of the domestic problems. The much bigger issue is that the reserve currency boost is dying away daily and that the 'nation' is run by monopolistic psychopaths who are oblivious and more desperate by the minute. It'll reverse itself soon though I'm sure.


Wed, 02/08/2012 - 16:34 | 2139109 Vincent Vega
Vincent Vega's picture

Quick, give the sheeple more SNAP cards!  /sarc

Wed, 02/08/2012 - 16:37 | 2139116 azzhatter
azzhatter's picture

You can't have it both ways, somebody is lying. Bennie says steady on the throttle for ZIRP, economy is fragile. MSM pundits and experts say happy days are here again, jackoffs like Cramer spew utter bullshit. Which one is it "A fragile boom?"

or a "Booming bust?"

Wed, 02/08/2012 - 17:03 | 2139213 rayduh4life
rayduh4life's picture

Mildly severe.

Wed, 02/08/2012 - 18:00 | 2139388 WonderDawg
WonderDawg's picture

It's a fine line they walk. It helps to have the MSM as your propoganda machine, and a population with the attention span of an E-Trade commercial. The whipsaw between hope and fear keeps the population confused but at the same time, mentally sedated. Amazing, really. Quite ingenious.

Wed, 02/08/2012 - 16:37 | 2139117 tony bonn
tony bonn's picture

"That is an awful lot of hoping."

i can guess for whom you voted in 2008 and why i think that all of your hoping is for nought....of course the alternative candidate was just as big a loser as yours....

the economy will not and cannot recover under its current shove your hope up your ass....

Wed, 02/08/2012 - 16:38 | 2139119 taniquetil
taniquetil's picture

If you do the math on consumer debt numbers the average American holds 4 credit cards and about $8300 in debt. About half of that $8300 is credit card debt.


God help us all.

Wed, 02/08/2012 - 16:44 | 2139144 VelvetHog
VelvetHog's picture

With only 30% of homes owned free and clear how can the average debt per American only be $8300?

Wed, 02/08/2012 - 17:57 | 2139411 taniquetil
taniquetil's picture

Consumer debt doesn't include mortgages.

Wed, 02/08/2012 - 16:45 | 2139150 Vincent Vega
Vincent Vega's picture

According to total debt per citizen is $50,878 which is mortgage, revolving and non revolving credit....just sayin'

Wed, 02/08/2012 - 19:02 | 2139405 TruthInSunshine
TruthInSunshine's picture

It's actually over $200,000 per citizen if David M. Walker, the former Chief Comptroller of the United States, is to be believed (or $700,000 per anyone who currently pays net taxes), based on what he has come with as a pretty concrete Debt of 61 trillion USD (that was as of 18 months ago, so add...I don't know...a couple trillion).

Kotlikoff pins it 3.3x as high as Walker, so that's a cool 2.4 million per net taxpaying citizen.

Nov 17, 2011 – Laurence Kotlikoff, professor of economics at Boston University, talks with Bloomberg's Tom Keene about a U.S. fiscal gap of $211 trillion.





Wed, 02/08/2012 - 18:05 | 2139437 gaoptimize
gaoptimize's picture

I'm sorry, lost me at their calculation of household assetts.  It implies that assetts ($77T source Federal Reserve) by far exceed debt and are growing much more rapidly than total debt.  I intuitively don't buy this.  I doubt this assett appraisal is marked to market.

Wed, 02/08/2012 - 16:41 | 2139133 JPM Hater001
JPM Hater001's picture

As a recent post showed I have clearly laid out inflation raging in food...and we know about energy.  The coming paradigm shift where you have no job, no credit and no food on your way to no home and no future will be very hard on people.

I think this laid it out best: From TruthNevertold channel.

Wed, 02/08/2012 - 16:42 | 2139139 Jason T
Jason T's picture

Fantastic write up.. keep this guy coming.  I've seen him on Dshort.. 

Wed, 02/08/2012 - 16:47 | 2139156 non_anon
non_anon's picture

what's a conundrum?

Wed, 02/08/2012 - 18:35 | 2139561 TruthInSunshine
TruthInSunshine's picture

It's a secret weapon that fractional reserve bankers use, in conjuction with government, to convince you that all is well, and that there's plenty of cash in the bank account, and then - boom - one day, you wake up, and you shit's gotten real overnight.

Wed, 02/08/2012 - 16:51 | 2139161 bob_dabolina
bob_dabolina's picture

Can't get no credit? 

We have 49 million on food stamps. Let's assume they are only single males getting the min. $200 

200 x 49million = $9.8 billion p/m 

On an annual basis that's 9.8 x 12 = $117 billion a year. 

That accounts for roughly 1/10 of the deficit and that's JUST for food stamps.  

That's borrowed money (credit) from the US government. Nigga' please, can't get no credit.



Wed, 02/08/2012 - 16:51 | 2139164 non_anon
Wed, 02/08/2012 - 16:57 | 2139179 bob_dabolina
bob_dabolina's picture

How about all the people who sell their EBT cards for drugs? 

Or the girl that was found living in a $1.2 million ocean front property in Florida collecting EBT and section 8 housing vouchers for over 8 years? 

Or the people found in California spending their welfare at casinos and resorts?

Government = Most inefficient handler of money EVER

Wed, 02/08/2012 - 17:03 | 2139192 non_anon
non_anon's picture

equal opportunity, miss ebt

Thu, 02/09/2012 - 20:01 | 2144065 LooseLee
LooseLee's picture

That's also $B117/Yr helping to keep this POS market levitated. Recipients can buy garbage with these 'food stamps'. Time to clamp down and put severe restrictions on what can be purchased with these 'snap cards'....Why should my tax dollars go to feed people with crap they don't need that many non-food stamp recipients cannot afford and do not buy? Fuck this welfare state (corporate welfare even moreso!)

Wed, 02/08/2012 - 16:51 | 2139165 Downtoolong
Downtoolong's picture

I suspect a lot of this new CC debt is originating from small mom and pop businesses trying to hang on, using it to finance everything from inventory, to receivables to the electric bill. These small individual based businesses can’t get loans from their bank like they used to, so, they are turning to their credit source of last resort. It’s not driven so much by the classic exuberant consumer spending as we know it. It’s borrowing out of desperation until you hit your credit limit…. and then what?

Wed, 02/08/2012 - 17:55 | 2139400 WonderDawg
WonderDawg's picture

Now there's something to think about. Very insightful.

Wed, 02/08/2012 - 16:52 | 2139171 apberusdisvet
apberusdisvet's picture

A conumdrum is what you  put on your dick when you fuck your sister, idiot/

Wed, 02/08/2012 - 17:04 | 2139218 non_anon
non_anon's picture

my bad, i don't swing your way

Wed, 02/08/2012 - 17:56 | 2139404 WonderDawg
WonderDawg's picture

Funny, his sister doesn't make me wear a conundrum. Lucky me.

Wed, 02/08/2012 - 16:55 | 2139180 Shizzmoney
Shizzmoney's picture

People on EBT? 47 million

Transfer receipts? 35% of personal incomes

1 out of every 2 Americans on some form of govt assist?

When it comes to serfdom, there's only one choice: Mastercard.

Wed, 02/08/2012 - 17:31 | 2139319 non_anon
non_anon's picture

welcome back Carter

Dependency Index Surges 23% Under President Obama

Wed, 02/08/2012 - 17:00 | 2139195 Fourth Horseman...
Fourth Horseman of the Apocalypse's picture

The reason why the jump in consumer loans has not resulted in a jump in PCE is due to the simple fact that most of the increase in consumer loans was due to a huge increase in student loans.  Of the $19.3 billion increase in total consumer credit, $16.5 billion was due to non-revolving credit and most of that is due to student loans.  Non-revolving credit grew at a double digit rate in November and December which is the time to  pay the second semester of college.  Fore the year, non-revolving credit grew at a 5.5% rate.  Revolving credit, which includes credit cards grew at a 0.1% for the entire year.  

Wed, 02/08/2012 - 18:31 | 2139367 non_anon
non_anon's picture

i got one today from Wells Fargo, 9 months balance transfers and purchases, 0% interest, fuck off, that is why we are in this mess today, don't they fucking learn!!!

also, solicitations on the phone day and night, I'm sick of it!

Wed, 02/08/2012 - 17:03 | 2139210 mrktjunkie
mrktjunkie's picture

When is somebody going to start talking about the tax hike associated with the 20% move in wholesale gasoline (RBOB) over the past 8 weeks? Who knows where it heads if refineries don't come back online quickly.


Wed, 02/08/2012 - 17:09 | 2139236 Stuck on Zero
Stuck on Zero's picture

I saved $250K today!  I decided not to buy a Ferrari.

Wed, 02/08/2012 - 18:32 | 2139546 non_anon
non_anon's picture

WTF?! good job!

Wed, 02/08/2012 - 17:43 | 2139370 westerman
westerman's picture

Is the American debt to GDP increasing or decreasing (public and private debt). I hear all this talk about deleveraging but isn't the USA borrowing more money than it is paying back and therefore leveraging rather than deleveraging?

Wed, 02/08/2012 - 17:54 | 2139394 swani
swani's picture


This is exactly the problem with the global agenda. What this agenda means for most people, on a local level, is a diminished standard of living.

On a macro level, the multinational companies see the world as one world, one market. They move their corporation structures to places like Ireland ( favoritie of Big Pharma) where corporate taxes are 12%. They influence the politicians to enact 'Free' trade agreements like NAFTA that only benefit multinationals at the expense of workers and local economies. The corporate press help them to promote this agenda as being 'good for America', reporting only propaganda derived from the press releases of the multinational corporations or the PR machines of politicians and the 'economists' that answer to them both.

Manufacturiung jobs were moved en masse to where wages are lowest and work conditions can be set by the multinationals. This makes cost of goods decrease and profits increase.

Over time, countries like the USA changed from being a manufacturing base for the multinationals, to being a service provider, but even those service jobs will eventually be moved overseas. We are seeing this right now when we speak to people in India when we call Capital One. Real wages have stagnated, while tens of millions of higher paying jobs have been lost.

Glass Steagal was repealed 5 years after NAFTA, easing the collateral rules for infinite credit creation, and credit replaced real earnings.

During the last decade, interest rates have been kept at 0% for investment banks, allowing the housing bubble to be blown while savers were forced into the stock market to make any return on their savings. People started depending on credit and the price of their homes going up, to suplement their ever decreasing incomes that have never been properly adjusted to real inflation.

This worked politically for a while, as people didn't realise that had been sold out to the multinationals and banking conglomerates by their politicians.

They only woke up when the investment banks that borrow at 0% from the Fed making and made giving credit to anyone with a heartbeat, got the tax payers to pay when these loans went bad.

If people were to look at the history and study the fundamentals of how we got here, instead of listening to 'economists', politicians and other pundits continuing to market the above agenda on the corporate media, it would be pretty clear what has been going wrong with this country for 20+ years.

If we want to fix our country, we have to stop thinking globally and start thinking locally. We have to start to produce what we consume. In a country like the USA, this would be easy. It just takes the will of the people to organise in their own communities and from the bottom up.

The politicians work for the multinationals, not the people. The monopolists don't want to pay workers wages that allow them to have a good quality of life. Why should they? This cuts into their profit margins.  They don't want competition. They want to become Too Big To Fail, Too Big Too Jail and for the people to guarantee their bad investments while not sharing the profits.

They want to price fix and give consumers little choice, look at the credit card companies, health insurance, Big Pharma. Of course they don't want things things to change. The policians on both sides have to do their bidding and so have to sell it to us these abuses, dressed up as something else. 

We have to stop listening to the corporate press, to the politcians and have to start listening to ourselves. They have power, but so do we.   

Buy local, support local businesses, put your money in a credit union. Stop supporting a media that lies to you. Stop buying from corporations that starve local economies. 

I cancelled my subcription to the New York Times when they didn't report that Baxter sent 73 kilos of live avian flu mixed into human flu vaccine to 18 distributors all over the world, including the USA.





Wed, 02/08/2012 - 17:56 | 2139402 Jena
Jena's picture

On That Great Come And Get It Day     Finian's Rainbow

Wed, 02/08/2012 - 18:49 | 2139605 slewie the pi-rat
slewie the pi-rat's picture

good to see that ole recession in the rear-view and credit expansion leading the way to new "growth"! [/s/]

Wed, 02/08/2012 - 18:55 | 2139627 LooseLee
LooseLee's picture

Well, Mr. Market is over-looking this shadow-fact. When it rears its ugly head as an actual fact, those 'asleep at the wheel' will be buried by its furious reaction in the 'market'. Unfortunately the market has not been 'forward-looking' for some time. The Oct. highs were actually quite accuracte looking ahead 6 months. Now, the markets are very over-priced and pricing in quite a recovery. Won't happen. My small biz is a good guage of worldwide appetite. Mid Nov - Mid Jan was very good. Sales have fallen off a cliff since Mid Jan. I can see this in local traffic and my own business. I am speculating that we have reached the 'high' for the season and that 'growth' will 'lull' into late Summer. After that, who knows?

Wed, 02/08/2012 - 19:24 | 2139729 Chartist
Chartist's picture

So the Fed will ensure that the stock market continues to rally....That will keep them spending.

Wed, 02/08/2012 - 19:43 | 2139781 kevinearick
kevinearick's picture

Mannerisms of Addiction

You are born into addiction, surrounded by increasing opportunity for additional addiction. No one alive today is responsible for empire History. Each and every individual is responsible for what it looks like tomorrow. The empire is a fusion machine, a black hole of algebraic reduction, from which diversity/fission emerges, in quantum integrals. It’s a space time event horizon bomb. We are replacing it with a computer.

The rough adjustment dial is Family Law, largely an implicit social function, which shorts all income event horizons back to the churn pool, to balance legacy asset conservation, and it is connected to the common law short, back through the history of empires, which had much more planetary surplus to exploit.

Because we have reached geographic saturation of current human behavior, resulting in a decline in supporting diversity, empire finances are blowing up, as climate volatility increases, because agency is connected in a positive feedback loop.

This breeding program feeds taxation addiction, implicit and explicit, in all its forms, to deliver final adjustments to the income event horizons. To hide its “sins,” agency increasingly expands credit beyond income, with negative relative interest rates, borrowing from future generations, based upon the empire assumption, to reward increasingly rigid horizon mannerisms, eliminating mobility/circulation in favor of control, as it loses control, becoming increasingly arbitrary, capricious and malicious as it gets farther behind the curve.

So fed, private corporate maximizes population spending to drive scale, feeding the event horizons credit in return. EMPIRE PRICE IS NOT A FUNCTION OF COST. Price is a function of how much the resulting irrational market will bear. Cost is a function of agency, which will always exceed price, creating the necessary inflation to hide itself, maximizing profit on legacy assets and socializing the losses against income. Treasury maximizes the tax base; the Fed prints, right up until the point of revolt threshold. And Congress sets the lottery pool.

From the perspective of intelligent parents, watching the curve calculus, the system crashed in the 70s, at which time they diverted all investment, which agency backfilled with financial leverage. Legacy behavior cannot stop itself, and you have what see and what you don’t see before you. With the new language comes new equations, new behavior, and a new empire, same as the old empire, with a new dress, more event horizons in the mix.

It’s all about separation of charge and the root of recursion. You must play stupid when working for the empire, and act intelligently when working locally. That’s as plain as I can make it. At fusion/fission equilibrium, each horizon recognizes and willfully ignores the mannerisms of the meek, which are submissive in word and dominant in action, AT THE FULCRUM TIP.

Bullying is self-adjusting. It says look at me; I am too stupid to think. Each click/horizon has its bully, which is bullied by another up the line of central control, which naturally attracts people pleasers, passive aggressive bullies themselves, all conforming to codes of conduct, part socially implicit, part codified in law, implicit and explicit. We all make choices from birth, to conform or not, lawfully or not. The longer the addiction, the more difficult the change. The law is a mountain to be climbed and surpassed.

All muscles, especially the individual brain, expand memory and need exercise for circulation, to extend health, but it is the meek, the one that exercises all muscles in balance, that inherits the earth. The point of teaching children civil manners (please, thank you) is to extend each horizon conformance set, creating a path of mobility through all, to symbiotically increase horizon number and circulation. Intelligent children are the common flux that ensures continued adaptation.

Legislative control naturally seeks equal outcomes; local parents seek equal opportunity. On the open side, premium rests upon individual collection, examination, and creation of data for symbiotic planetary adaptation. Agency may only approximate these integral with derivative equations, grouped into relatively arbitrary horizons. It not only fits the data to see itself, but it also requires YOU to give it the equations. IT CANNOT THINK; IT’S A LEAST-COMMON-DENOMINATOR FUNCTION.

THERE IS NO PLAN. A plan is a starting point, entry into the wave. Conditions change, so the stack is reordered with a hash table function. Think of it like a to-do list, which you are learning to prioritize with experience riding waves. Ever notice the rich kid and his flock with billion dollar boards enthusiastically entering the surf at exactly the wrong spot, and reluctantly asking the locals for direction after wearing themselves out.

So, the Feds can no longer pay the localities for allegiance, to control local property price discovery…and the community needs to attract intelligent young people…simple math beats the empire every time, because it is a stupid computer. Perform the swap, implicitly and then explicitly, to employ local resources more effectively. Tradable surplus, not agency, acts as the negative feedback loop to equilibrium.

True price discovery is not possible with local dependence upon central control. Communities must be self-sustaining. Think in terms of the cost of nutrition, not the cost of food. Think in terms of providing a home, not the cost of housing. Think in terms of developing the necessary tools, not the cost of clothing. Those refusing to abandon the old big city model are largely FUBAR.

If you need a break here and there, by all means, watch the sh**-show, but from a safe distance, and only as entertainment. Government can only see itself, and it only knows what you tell it. Never go down a one way street, unless you are the only one with an exit. Let the empire build its blind alley around your exit.

Thu, 02/09/2012 - 13:22 | 2142413 malek
malek's picture

The last paragraph puts to shame the otherwise good article...

Sat, 02/11/2012 - 09:42 | 2148982 Orly
Orly's picture

I listen to Lance on KSEV radio at 6pm central in the evenings.  I'm sure you can find his show somewhere near you...

I wish there were a segment dedicated to 4X, though.  (If you're listening, Lance...)


Mon, 02/13/2012 - 01:17 | 2152605 q5251355
q5251355's picture

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