This page has been archived and commenting is disabled.

The Relentless Household Deleveraging In Charts

Tyler Durden's picture




 

While the narrower spreads in Europe created the unintended consequence of perversely reducing the urgency for banks to delever their over-stuffed balance sheets (and in fact in many cases likely make them worse thanks to the ECB), the US Household continues to (sensibly) slowly but surely reduce their leverage. As today's Bloomberg Brief notes though, the slow pace of deleveraging will continue to weigh on growth over the next few years - even as they have drawn down debt as a percentage of personal income from its peak in June 2009 at 114.76% to 101.1% at the end of 2012. There is a long way to go to the apparent Maginot line of supposedly sustainable 90% and with wage growth stagnant, the bulk will come from debt reduction in true balance-sheet-recession style - putting still more pressure on a perniciously polarized government to do anything about it.

While progress has been made, there is still a long way to go for the US Household to get to supposedly sustainable levels of debt to personal income...

...and it seems there is no interest in ramping up the spending that we do not have as credit card accounts remain dramatically lower than pre-debt super-cycle peaks...

...and while any deleveraging is good deleveraging, write-downs and defaults seem top of the list and the stability of recent months in 90-day delinquencies does not suggest 'improvement' as much as a pause in the pain...

 

Chart: Bloomberg

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 02/29/2012 - 10:37 | 2207659 4realmoney
Wed, 02/29/2012 - 10:41 | 2207669 battle axe
battle axe's picture

Ron Paul will never get elected to the presidency. But he makes some good points. 

Wed, 02/29/2012 - 11:53 | 2208008 mraptor
mraptor's picture

It is good he wont become president. because whoever get elected now will get blamed for the biggest crisis... not Bush and Obama..

Wed, 02/29/2012 - 14:14 | 2208837 A Nanny Moose
A Nanny Moose's picture

About the only logical reason to NOT want Ron Paul as President is so Libertarians aren't blamed when that light at the end of the tunnel turns out to be a freight train.

Wed, 02/29/2012 - 11:55 | 2208019 JPM Hater001
JPM Hater001's picture

Well, you will never be elected and make a bad point.  Never let a crisis go to waste and there is one a-brewin.

Ron Paul wins every survey on "Who understands the economy best."

BY A LOT!

Wed, 02/29/2012 - 10:44 | 2207678 Born Patriot
Born Patriot's picture

When are people going to admit that the economy is suffering because of decades of multiculturalism? This is blindingly obvious to patriots across America. We need to restore true American values and culture and get back to the CONSTITUTION. Only then can we restore prosperity to this great country. Vote Ron Paul 2012!!!

Wed, 02/29/2012 - 10:45 | 2207685 jm
jm's picture

Shut up.

Wed, 02/29/2012 - 10:52 | 2207705 tmosley
tmosley's picture

Literally everyone here knows it's you, RNR.  

Stop playing these stupid, childish games.

Wed, 02/29/2012 - 11:02 | 2207739 battle axe
battle axe's picture

Nice flag inbred. 

Wed, 02/29/2012 - 11:51 | 2208004 JPM Hater001
JPM Hater001's picture

Hey, isn't our monetary system based on the need to loan as much as last year plus the interest difference?

Rut roh.

Wed, 02/29/2012 - 11:57 | 2208038 JPM Hater001
JPM Hater001's picture

Please stop saying dumb things with Dr Pauls name in the context.

liberal-ism, fascism, communism, socialism would have all worked but if you want to blame multi-culturalism you're in the wrong country.

Wed, 02/29/2012 - 18:08 | 2210017 Sans-culottes
Sans-culottes's picture

Because you are living in the 1800s, how did you manage to learn to use the internet and of all things find ZH? Damn time traveling confederates

Wed, 02/29/2012 - 22:02 | 2210724 Nigh Eve
Nigh Eve's picture

"Born Patriot" is likely a "false flag" operative posting messages for the benefit of someone who is opposed to Ron Paul.

Wed, 02/29/2012 - 10:38 | 2207661 LawsofPhysics
LawsofPhysics's picture

Very similar to pre-depression deleveraging.  The reason why my Grandfather and his generation always used cash and held some PMs.

Wed, 02/29/2012 - 10:47 | 2207691 bdc63
bdc63's picture

Our grandfathers' generation is known as "the greatest generation" for a lot of reasons, and that is one of them.

I wonder if we will ever be "great" again ...

Wed, 02/29/2012 - 10:49 | 2207699 Moneyswirth
Moneyswirth's picture

We will be "great" salt miners for our Chinese overlords soon

Wed, 02/29/2012 - 10:53 | 2207707 SheepDog-One
SheepDog-One's picture

'The Greatest Generation' will be crushed soon when the next default robs all their pensions and 401K's.

Wed, 02/29/2012 - 11:08 | 2207762 LawsofPhysics
LawsofPhysics's picture

SD,  most of that generation is dead.  You are referring to their spoiled kids, the baby-boomers.

Wed, 02/29/2012 - 11:13 | 2207796 SheepDog-One
SheepDog-One's picture

Yep, and they created most all of this shit.

Wed, 02/29/2012 - 15:03 | 2209095 ONO47
ONO47's picture

Well, it looks like we will have the opportunity to show future generation what we are made of.

Wed, 02/29/2012 - 18:24 | 2210073 bdc63
bdc63's picture

nice positive spin!  I like it.

Wed, 02/29/2012 - 10:55 | 2207712 midtowng
midtowng's picture

These charts may be bad in the short-term, but they are very good in the long-term.

Wed, 02/29/2012 - 12:25 | 2208239 Ghordius
Ghordius's picture

I still have trouble in believing the rise in mortgages in the first part of the chart... Wow. Every time I am just stupified... For partecipants it must have been one hell of a ride...

Wed, 02/29/2012 - 10:39 | 2207663 Moneyswirth
Moneyswirth's picture

Of course this will get worse.  Do we honestly believe everyone will be paying cash for the new iPad 3?  Get real...

Wed, 02/29/2012 - 10:40 | 2207664 DormRoom
DormRoom's picture

the entire financial environment is like boiling a frog.  Those in the know, believe they can get out in time, given their access to information, and political structures,  while the rest of society doesn't even know how the Central Banks have put them in a pot.

Wed, 02/29/2012 - 10:40 | 2207665 battle axe
battle axe's picture

Sure the US public is deleveraging, it is called walking away from your mortgage on your underwater house. 

Wed, 02/29/2012 - 10:57 | 2207716 francis_sawyer
francis_sawyer's picture

Might as well just juxtapose the chart line against what the Treasury heaps on the public debt... I'd guess it matches dollar for dollar (minus the cut that the banks get to convert into raw materials & PM's)...

DEBT SOCIALISM!

Wed, 02/29/2012 - 17:39 | 2209881 dolly madison
dolly madison's picture

Yes, and walking away from credit cards.  It's a good thing for breaking the machine,

Wed, 02/29/2012 - 10:41 | 2207668 SheepDog-One
SheepDog-One's picture

Pfffft...whatever....just print $300 million dollars, send checks out to every american, everyone in america a millionaire. Problem solved. Where do I pick up my Nobel prize in economics?

Wed, 02/29/2012 - 11:21 | 2207831 Problem Is
Problem Is's picture

Barry Soetoro has an extra Nobel peace prize he isn't using...

Wed, 02/29/2012 - 10:42 | 2207670 TigerTrail
TigerTrail's picture

All Negative news is "Bullish"

 

Relentless Rally in Dow Continues.......

Wed, 02/29/2012 - 10:42 | 2207675 Moneyswirth
Moneyswirth's picture

ALL news is bullish

Wed, 02/29/2012 - 10:44 | 2207684 SheepDog-One
SheepDog-One's picture

Yea. Well, until it suddenly isnt, then everyone sits stunned wondering what happened since new highs were so guaranteed thru this year.

Wed, 02/29/2012 - 10:48 | 2207698 bdc63
bdc63's picture

Not to worry ... Uncle Benny stands ready to push the print button at a moments notice ...

Wed, 02/29/2012 - 10:52 | 2207704 SheepDog-One
SheepDog-One's picture

Well thats what they want everyone to think anyway, that markets will never go down again. They can buy it all they like, Im not near that stupid.

Wed, 02/29/2012 - 11:10 | 2207778 pacu44
pacu44's picture

He never stopped printing... Just sitting on the warehouse floor ready for shipment...

Ben doesnt know how to stop printing, he is testing his release theory(z)

Wed, 02/29/2012 - 11:26 | 2207857 Problem Is
Problem Is's picture

The Bernank's Nightmare

Cue-bald Bennie wakes up at 4am every morning with his lip quivering and beads of sweat on his bare cranial...

Dreaming his printer's Bernanke Buck Green ink cartridge just ran dry...

Wed, 02/29/2012 - 11:36 | 2207905 eddiebe
eddiebe's picture

?Whatever. Bernie wakes up, has a cup of the best coffee FRN's can buy on his all paid for platinum card issued by JPM, smiles at himself in the mirror and then goes down in the basement, opens his vault and admires his stack of gold kilo bars.

 Ahhhh, that's the way.     http://www.youtube.com/watch?v=q3svW8PM_jc

Wed, 02/29/2012 - 11:46 | 2207964 Confused
Confused's picture

Do demons really need sleep?

Wed, 02/29/2012 - 10:42 | 2207671 Eally Ucked
Eally Ucked's picture

It looks to me that the whole deleveraging occurs in mortgage area. So suddenly Americans started to overpay their mortgages? Or maybe they got chased out from their houses by the banks?

Wed, 02/29/2012 - 11:31 | 2207885 MachoMan
MachoMan's picture

It isn't that banks aren't trying to work through their shadow inventory, it's just that they can't all at once.  As a result, the banks that are "on the ball" are trickling through the losses as they get NSF and other bullshit fees to compensate.

Wed, 02/29/2012 - 10:43 | 2207676 TigerTrail
TigerTrail's picture

Remember the Algorithms are based on "Human-Psychology"

Wed, 02/29/2012 - 10:44 | 2207681 TigerTrail
TigerTrail's picture

Dow 14k in sight ?

Wed, 02/29/2012 - 10:48 | 2207687 SheepDog-One
SheepDog-One's picture

Only 10 more avg trading days left until previous insane mega-bubble market tops are blasted thru! 

Except last time DOW was at 14,000, a barrel of oil cost $30. This bubble pop is going to be very nasty. Everyone all-in on this one will be devastated for life.

 

Wed, 02/29/2012 - 10:53 | 2207709 resurger
resurger's picture

Sheep,

is this any good?

ProShares Trust Ultra VIX Short (UVXY)

http://finance.yahoo.com/echarts?s=UVXY+Interactive#chart1:symbol=uvxy;r...

I want to load up?

Wed, 02/29/2012 - 11:16 | 2207815 SheepDog-One
SheepDog-One's picture

Who knows?

Wed, 02/29/2012 - 11:22 | 2207842 resurger
resurger's picture

Then its good. thnx

Wed, 02/29/2012 - 11:30 | 2207882 Problem Is
Problem Is's picture

If it keeps going up your trades will be cancelled in the next flash crash...

Jamie & The Corz will officially vaporize your account...

Wed, 02/29/2012 - 12:23 | 2208228 resurger
resurger's picture

Cant eliminate that possibility problem

In the next flash crash lots of people accounts will be vaporized, especially the Bulls.

Wed, 02/29/2012 - 10:59 | 2207723 Village Smithy
Village Smithy's picture

There are a lot of people out there who haven't hedged in any way and think they are just going to get out when the market turns. I wish them luck.  The PPT is going to be overwelmed.

Wed, 02/29/2012 - 10:47 | 2207694 surf0766
surf0766's picture

No, 20 K first. My 60 year old neighbor wants to start golfing 4 times a week instead of 3 and isn't getting enough of a return from the sheep.

Wed, 02/29/2012 - 10:46 | 2207689 jm
jm's picture

The impact of the next wave of defaults will cement this trend in stone. Then we will be Japanese.

Wed, 02/29/2012 - 11:44 | 2207952 Problem Is
Problem Is's picture

Oh man... you walked into that one...

Turning Japanese

I've got your picture, I've got your picture
I'd like a million of you all round my cell.

I'm turning Japanese
I think I'm turning Japanese
I really think so...

Wed, 02/29/2012 - 15:10 | 2209114 ONO47
ONO47's picture

No sex, no drugs, no wine,  no women

No fun, no sin, no you, no wonder it's dark

Wed, 02/29/2012 - 10:57 | 2207717 TigerTrail
TigerTrail's picture

Another 10% Rally from here - YEA ..

Lightning Fast.???  - YEA -The way things are.

10% Correction from here - Not this Year ???? (Thx to the Plunge Protection Team)

People scratching their heads yet Again on the Rally - YEA

Going Crazy and Rolling on the Floor Laughing at the Markets stupidity - YEA

 

Wed, 02/29/2012 - 11:01 | 2207733 TigerTrail
TigerTrail's picture

Breant Crude $160 and Dow 14k - YEA

Wed, 02/29/2012 - 11:08 | 2207763 Amused2Death
Amused2Death's picture

Retail is still on the sidelines, they'll wait until they're suckered in and then they'll pull the plug...

Wed, 02/29/2012 - 11:15 | 2207812 SheepDog-One
SheepDog-One's picture

Yep, retail wouldnt buy at 9,000, or 10,000, or 11 or 12 or 13,000....but they'll definitely go all-in at 14,000 again.

Wed, 02/29/2012 - 11:25 | 2207856 Everybodys All ...
Everybodys All American's picture

I seriously doubt it. When it comes to money many just don't have it right now. The housing ATM is closed.

Wed, 02/29/2012 - 11:34 | 2207894 MachoMan
MachoMan's picture

This.  The money on the sidelines is now only people who have been burned or watched others get burned...  There may be a sucker born every minute, but you can only skin a sheep once.

Wed, 02/29/2012 - 11:46 | 2207961 Problem Is
Problem Is's picture

But you can bleed the Irish cow every Sunday...

Wed, 02/29/2012 - 11:30 | 2207881 eddiebe
eddiebe's picture

Since FRN is debt and households are deleveraging while banks are leveraging up, it means people are getting poorer and bankers are getting richer. I'm joining the bankers. Getting a low interest loan 30 years fixed and buying a nice homestead.

I'll never be able to beat them at their game, but in joining them ( well sort of ) it evens the field a bit.

Wed, 02/29/2012 - 11:41 | 2207944 shortus cynicus
shortus cynicus's picture

...and while any deleveraging is good deleveraging

Thanks for that irony.

I'm missing this point in big inflation-deflation debate.

So now, all lovely readers of ZH being strong individuals, please repeat after me: deleveraging by default is highly inflationary, specially if credit institutions are TBTF.

Wed, 02/29/2012 - 11:53 | 2207994 Problem Is
Problem Is's picture

It's credit/debt deflation of assets...

With pockets of price inflation due to private central banks devaluing by printing mass amounts of money to save the worthless balance sheets of the central banks' owners...

The TBTF banksters...

Credit is destroyed and not replaced as the hot money flows from the TBTFs to speculation instead of lending...

That's my novice understanding anyway...

Wed, 02/29/2012 - 12:38 | 2208300 FreeNewEnergy
FreeNewEnergy's picture

It's often said that one cannot underestimate the stupidity of the American people.

However, in this current economic and political climate, I've found that more and more "dumb 'Mericans" are getting a little bit smarter and finding ways to save, and, in some cases, prosper, though the smartest are centered in the private sector and mostly in small businesses where non-compliance with government regulations, under-reporting of income - keeping their tax expenditure low - and other creative enterprises such as micro-loans, PM purchases, home gardening (and brewing) and stockpiling (hoarding) of essentials are slowing becoming mainstream.

While the banks and the government continues to seek ways of stripping out income from the masses, a growing percentage of the masses are refusing to play ball in what they consider a rigged game.

It's really the classic feudal struggle, as those in power seek to hold onto their power while the bravest serfs are fomenting radical change, aka, revolution, making strides to instruct their families, friends and neighbors to do likewise.

Eventually, these trends will cross in a spasm of power. Government revenue is falling as their expenditures increase or stay the same. Non-compliance grows to a point at which the stranglehold will be broken or government cracks down with the iron fist.

The question for most Americans is now not which party they support, but which best reflects their own values, which, unfortunately for TPTB, is neither.

Civil disobedience is well ingrained in "some" American psyches and those at the top of the intelligence food chain are now rowing hard against the tide.

Sooner or later, the tide will turn. Americans - and to a large extent, most of the world's population - aren't that stupid. 

Wed, 02/29/2012 - 12:51 | 2208402 bulldung
bulldung's picture

I wonder if the instuction of Dave Ramsey if having any effect on this or if it's all about defaults. How long will the deleveraging take to produce non- Fed printing growth?

Wed, 02/29/2012 - 12:52 | 2208413 bulldung
bulldung's picture

I wonder if the instruction of Dave Ramsey is having any effect on this or if it's all about defaults. How long will the deleveraging take to produce non Fed-printing growth?

Do NOT follow this link or you will be banned from the site!