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Revolving Consumer Credit Has Biggest Jump Since 2007, As Depository Institutions Turn On The Spigot
Two items of note in this month's consumer credit statement. First: after dipping the most in April ($3.5 billion) since April of last year, revolving consumer credit soared by $8 billion in May, the most since November 2007, and just shy of half of the $17.1 billion in total consumer credit increase, solidly beating expectations of an $8.5 billion increase. Whether this one time spike will hold is unknown. What is known is that the US government continued to fund student and car loans to the tune of $6.2 billion, or roughly in line with historical Federal Government funding. Which, however, brings us to the second note. In May something quite curious happened: as the second chart shows, while the Federal government continues to be the primary source of lending, the biggest source of loans in May was actually Depository Institutions, which added $17.5 billion in May, a number only matched by the surge in December lending amounting to $21.3 billion. Back then, however, all of this lending was to fund holiday purchases which would soon be returned (we all remember the epic surge in December retail sales, only for everything to be unwound and then some in January and February). Which then begs the question: just what did consumers splurge on in May? Because it better have been more than just gas.
Total monthly consumer credit: revolving and non-revolving.
Sources of consumer credit.
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Does it make sense to lend in this low interest rate environment?
Only if you borrow it from the same people at even lower rates.
Sure it makes sense. Get money fresh off the printers for free and loan it anywhere from 6 to 30 percent. The problem is nobody has a job to pay it back.
Well, the TPTF and huge corporations don't consider this a problem.
When you are drowning in Shit Creek, you'll take a paddle from anywhere.
Even if that paddle was meant to be put in your asshole.
There are those who Swipe Their EBT b/c It's "Free", and then there is that increasing portion of the population living on the minimum monthly payments credit card or payday/title loan-cash advance model of sustenance.
Amerika. Swipe Yo Plastic, grab that Western Union loan, pledge the title to your Chevy Celebrity for a $373.22 payout...or Swipe Yo EBT, bitchez.
Looks like the top of a sine wave.
Low interest rate for whom? or was this sarc/?
Asset backed security issuance. They're good collateral again, remember?
we are so fucked
Did the iPhone 5s come out and no one told me?
Samsung is eating Apple on smart phone sales. Their Galaxy S III is the new top dog, and is going to stay there for long enough to kill iPhone sales. Is Bass shorting Apple, too? Without Sack's replacement, Apple is finished.
OTOH, he'll make so much money on shorting Japan, he'll only be working for fun.
I'm guessing the 99'ers who recently dropped are now trying to make ends meet and the rest of us are charging our summer vacation plans.
Exactly.
I am not so sure about. Cat food is pretty cheap these days and it doesn't taste half bad either.
Yeah but take it from me..dog food is tastier.
Stop flipping me off granny. America is two cats and a dog away from revolution.
With a little kimchee, it's all tasty, Dick. Had it myself, tastes like monkey.
Just about a year ago, a can of cat food was $.46. Now, on sale, it's $.50. Not on sale, it's $.55. But there is no inflation.
Still expensive, though.
A burlap bag, rock, and string cost $1.50 ---> Therefore there's a three day payback period and then back into the black...!
Just sayin'.
It won't be cheap for long. It will soon be people food and the price will go up. People will soon be eating cats though, so if you love your cat, keep a close eye on him /her--same goes for your dog. Tired of pesky squirrels? or possums getting into your garbage - they'll soon be on the run -running for their lives. If you are growing food in your back yard garden, you's best surround it with an electrified fence. In fact, it could get so bad, that someday banksters might start tasting good. One fattened bankster could feed your whole block in a block party. May sound bad -but there are also benefits to such neighborhood gatherings. Gerald Celente says the next depression will result in all of us getting back to community and getting to know our neigbors better. Just make sure you check all the banksters pockets before you put him on the grill. A lot of these cretins are known to hide their gold/diamonds, etc. in some really disgustng places. Sounds bad, but one half ounce gold coin retrieved from a good pre-barbecue cleaning can pay for all the trimmings, side dishes and desert.
I don't know about that. The inflation rate for Friskies and Little Can is pretty darn high.
@ Cursive,
" just what did consumers splurge on in May?"
Answer: Guns, guns and more guns. Ammo, ammo, ammo and more ammo.
Oh, shit.
http://www.forbes.com/sites/larrybell/2011/06/07/u-n-agreement-should-ha...
I have one credit card with no debt outstanding. I just used it to pay a lawyer a $3,000 initial retainer for arbitration. The card is issued by Wells Fargo. Guess who I am filing against? Guess what I am going to do if I lose?
DOWN WITH THE BANKSTERS!
I believe that is called bank to mouth, only performed by slutty, drunk banks.........
I already started an LLC for my video company that will be specializing in bank to mouth pov videos.
Look for our first title "Two Bankers, One CO2 Tank" in adult stores near you.
401-k gotta be getting tapped dry
Has it been 7 years, already?
Consumers "splurged" on rent, food, and utilities...those who didn't qualify for unemployment or SSI that is.
Must explain why REITs are breaking 52 week highs...again....and again.
The only financial instrument to never ever go down. Ever.
Don't remind me. This is Bernank's last stronghold...these MUST hold.
Frickn' ridiculator, waitin' for this to bust.
The fate of the entire world depends on the price per square foot of empty office space and boarded up strip malls. The entire system collapses if the equity valuations don't stay at or above 60X earnings.
I would have never figured.
CMBS,
roger that.
Tyler, they spent it all on air conditioners and fans:
http://www.ncdc.noaa.gov/sotc/service/national/Nationaltrank/201205-2012...
It wasn´t Gold and Silver bitches.....
...or pay taxes??
Taxes? TAXES?
http://www.nytimes.com/2011/11/03/business/280-big-public-firms-paid-lit...
And, lest we forget the Marc Rich pardon:
http://www.msnbc.msn.com/id/48118502/ns/business-personal_finance/
... sorry I didn't make clear... the individual households... not the businesses/firms.
99 weeks of UE checks ran out-- the muppets have turned rabid on the banks
Deck chairs. For rearranging.
I thought EZ student loans are now over $1 Trillion (and soaring) and most of it is backed by the Gubbermint (de facto)(same as the mortgage industry Fannie and Freddie):
http://www.doctorhousingbubble.com/bubble-university-student-loan-accoun...
something tells me somebody making the chart hit the wrong button, because it sure wasn't spent at retail.
Taking out high interest personal loans to pay back student loans?
Hell it's a good idea, take out $10k from a TBTF bank and use it to pay off half your student loan. Tell the TBTF bank your bankrupt and default on the loan. Get around that pesky student loan non forgiveness thing.
Are you sure?
SPG is only trading at 50X earnings. Malls are all the rage right now.
The World Series Of Poker was coming up in June/July. Vacations time is pretty big for credit card usage.
Either that, or it was a bunch of people who came off the UE rolls and needed their own version of QE to help pay for the food, gas, and rent (which are all going up).
Could be the savings rate is tanking and people look to the next thing to hang on to.
US Personal Saving as a % of Disposable Personal 3.9% down from 5.8%The market pretends to improve, people pretend to spend money.
I pretend I am on a yacht everytime I take the bus to work every morning.
The only difference between me and Mitt is the fact that instead of serving me drinks like on Mitt's yacht, the Mexicans on my bus are actually drinking them.
Should have used Limo comparison.
"First: after dipping the most in April ($3.5 billion) since April of last year, revolving consumer credit soared by $8 billion in May"
I doubt banks are really changing their lending policies on a dime like this. Or households their borrowings. Looks like a timing effect/working day adjustment problems in the data.
Don't be too sure. Credit card companies are getting desperate. I just got approved for a credit card with a 2,200 dollar limit, 0% interest for 15 months. My girlfriend went straight to their website and applied, she got 0% interst for 12 months. Go shopping anywhere and you will find all sorts of "deals" that require you to sign up for some type of credit card. A week ago I went shopping for clothes, I signed up for a store credit card and they took 40 dollars off my total price and I ended up paying only 110 dollars. That was after I saved 20% on the store sale as well. Over a year ago I got approved for a 7k dollar line of credit, 0% interest for 1 year. Don't worry, I'm paying off these credit cards in full without paying a single dime in interest. I'm saving this current card for emergencies, I have a 15 month interest free loan just waiting if I need it. Well.. the loan deminishes every month of course. If I'm taking advantage of these deals while having a substantial amount of my savings in real money, just imagine how other people are using these easy money/credit offers. When the shit hits the fan I will be prepared, the rest of these poor bastards are just going to default and the entire banking system will have to be bailed out again. The ship is sinking and the people are too distracted by the nice weather to notice.
I gotta say that down here in SouthEast Florida, the summer cruise season (Ft. Lauderdale and Miami) is looking pretty good - better than last year anyway which was better than the year before. Not liek i used to be pre 2008/2009. Anecdotal reference that the planes these cruisers come in on - and leave on - are pretty full. Of course the airlines have cut down on flights a bit. I can't afford to go cruisin'...
They spent it all on vaseline. They know what's coming.
It's a net number. It's not that people are buying more, it's that they are less able to pay down what they already owe.
Will this turn money velocities upwards? And inflation? Is it enough to offset the lack of mortgge lending?
http://confoundedinterest.wordpress.com
Women are spending on increasing lip and butt size, men on penis extension.
Wouldn't it be great if everyone in the U.S. used their credit card to buy gold and silver.
I just talked to a cars salesman, and he said he just had his worst month ever. Not a statistical sample to be sure, but maybe others could share any insight they have on U.S. car sales. As Zerohedge points out, there's quite a bit of channel stuffing inflating new car sales.
Did you tell him that his "worst month ever" might be the "best month" looking 2 years down the road ...
Demand, demand where are you? Where, oh where are the buyers?
Government boosted sales of cars and trucks since 2009 has come to an end.
3 more "For Sale" signs went up down the way....one a "pre-foreclosure" and the other $42/sf....each of those folks has 5 kids so i bet they need lots of work considering the lawn never gets mowed and their fences are falling over....shame....glad to hear the economy is "turning around" and "the private sector is doing ok" from what I read....just don't see it yet.
I just talked to a cars salesman, and he said he just had his worst month ever. Not a statistical sample to be sure, but maybe others could share any insight they have on U.S. car sales. As Zerohedge points out, there's quite a bit of channel stuffing inflating new car sales.
Depends where you live.
Car sales in the US overall are up substantially, new home sales in DFW are up 22%,last mo over previous year.
Construction is going on all over.
Also Rick Perry just told Obamacare to stuff it.Texas will not be a party to the reach around the Const says Perry.
Eight other states have also opted out.
SO FAR
OT, as an aside,IF Owhammy Signs UN 21 Treaty and the Senate ratifies it(they will be dead meat if they do if they have another election), then get ready for a secession run, and an all out bloodbath.NO way Texans and many others will allow their semi autos to be seized..............bank it.
This would be the ultimate TEOTHWAWKI scenario...and JUST the Emergency Owhammy needs to call out the goon squads.
I was in Toyota Fargo in May one of the sales guy said they had had there best month ever in March and sale were not slowing down
It is odd that indiscriminate charging while plotting a default is getting cheaper.
Better act now, before cheap is obsolete.
Well, one of my best friends lost her job a while back in another state, sooo here is what she did. Over the six months she got unemployment, she ran up all her credit cards for cash advances, bought some food staples and some funsy stuff with the rest of the available balances. Then, she ditched her cell phone and moved in with her mom here in this state but first had her mail from the old address forwarded to a P O Box in the old state, which a friend checks for her every so often. She pays her car insurance in cash, and got a new cell phone which only her very close friends have.
She plans on living "off grid" for a while, then file for bankruptcy a couple of years from now. Maybe she is part of that credit run-up??? I bet a lot of people do stuff like this.
Squeeky Fromm, Girl Reporter
Someone's paying the utility bills with the credit card.
Obama's vision: food stamps, disability, part-time employment, credit card debt, no mortgage. = NO VELOCITY AND NO GROWTH.
http://confoundedinterest.wordpress.com/2012/07/09/consumer-credit-rises-but-is-it-enough-to-spur-growth-velocities-and-labor-market-still-lousy/
Can I pay my mortgage with a credit card? Get me those airline miles so I can relax on a beach while everything falls apart!
This more than anything this will tell the tale. If Americans run out and max out their new cards on "stuff" it holds the bubble together another few months. If consumers use the credit to pay bills or as an emergency fund - that fat lady will have finally starting singing.
0% same as cash for home improvement projects
Convergence is near!
http://shutupnsing.wordpress.com/2012/07/10/the-devil-is-in-the-libor/