The New York Fed just published its latest Quarterly Report On Household Debt And Credit.
“In Q1 2013 total household indebtedness fell to $11.23 trillion; 1.0% lower than the previous quarter and considerably below the peak of $12.68 trillion in Q3 2008,” said the New York Fed in a statement.
This suggests the deleveraging process that has been slamming the economy may not be over.
On the plus side, more Americans are staying current [...]
by Charles Hugh Smith from Of Two Minds
The Global Economy – It’s All About Increasing Leverage
If the global State/finance Empire can’t increase systemic leverage, it will implode.
If we look at the global economy with unclouded eyes, we reach this conclusion: “This whole thing is about leverage.” If leverage doesn’t increase, the system implodes. But since collateral is disappearing from the global economy like sand castles in a rising tide, and disposable [...]
BY HOLMAN W. JENKINS, JR.
Ignore the man behind the curtain, said the Wizard of Oz. That advice doesn’t pay in the latest scandal of the century, over manipulation of Libor, or the London Interbank Offered Rate. The mess is one more proof of the failing wizardry of the First World’s monetary-cum-banking arrangements.
Libor is a reference point for interest rates on everything from auto loans and mortgages to commercial credit and [...]
Okay, so the Associated Press (AP) just reported that “Barclays and its subsidiaries have agreed to pay more than $450 million to settle charges that it tried to manipulate key global interest rates.”
That might seem like a lot of money, but remember that this is basically the shareholders of the bank footing the bill for criminal actions of the bank officers. According to the AP:
The rates affect the costs of hundreds of [...]
FRANKFURT (Reuters) – Credit rating agency DBRS said on Friday it would decide by late August whether or not to cut its ratings of Spain and Ireland below the crucial A threshold, a move that could substantially raise the cost of funding for the two countries’ hard hit banks.
A downgrade from the A (high) rating DBRS now has for Spain and A (low) for Ireland, to triple-B or lower would [...]
368%: The jump since 2007 in the measure of consumer credit held by the government comprised primarily of student loans.
If a student loan bubble were to pop, the government, not private banks, would be the one standing around with gum in its hair.
Issuance of student loans has soared in recent years, hitting $867 billion at the end of 2011, according toan analysis from theFederal Reserve Bank of New York, more than [...]
by Charles Hugh Smith from Of Two Minds
Debt Serfdom In One Chart
The essence of debt serfdom is debt rises to compensate for stagnant wages.
I often speak of debt serfdom; here it is, captured in a single chart. The basic dynamics are all here, if you read between the lines:
1. Financialization of the U.S. and global economies diverts income to capital and those benefitting from globalization/ “financial innovation;” income for the top [...]
Dick Bove, an analyst at Rochdale Securities, and Vadim Zlotnikov, chief market strategist at AllianceBernstein, spoke to Bloomberg TV’s Trish Regan and Adam Johnson today about the outlook for stocks. Bove said that Morgan Stanley should be “bought aggressively, and bought now.”
Dick Bove on the kind of momentum in store for financials/bank stocks:
“I think it’s considerable. If you look at the earnings power of these companies, they’re a cyclical group [...]
OVERWHELMING STUDENT debt has become a source of worry and financial distress for many millions of people–and even worse for the one in five people with student loan debt who are classified as delinquent.
And the problem will only get worse as a new generation of students and recent graduates, carrying a bigger loan burden than ever before, struggles to find work in an economy that, despite statistics showing job growth, [...]
Depressing news. Schools overcharge, the young and uninformed agree to loan terms which loan sharks envy and another bubble forms:
Student loans support the education of millions of students nationwide, yet much is unknown about the student loan market. Relevant data are limited and, for the most part, anecdotal. Also, sources tend to focus on recent college graduates and do not reveal much information about the indebtedness of parents, graduate students, [...]
Consumer credit expanded sharply in January in a generally positive sign for the economy as people borrowed money to buy cars and go to school, Federal Reserve data showed on Wednesday.
But at the same time, the report also pointed to a decline in credit card usage, which could point to some jitters among consumers regarding their outlook for earnings.
Total consumer credit grew by $17.776 billion in January, which was [...]
Wolf Richter www.testosteronepit.com
Another student protest, another mass arrest. Monday, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds of students then flooded the Rotunda of the Capitol, a somewhat raucous affair. Eventually, the California Highway Patrol cleared them out, and 60 were carted off and thrown in the hoosegow for trespassing and resisting arrest.
Their problem: tuition increases. Already, tuition in California’s state schools has tripled over [...]
The ratio of income growth to leveraged debt will lead most asset classes into a deflationary spiral. Income growth over the past 20 years in most if not all high tech has been slightly negative based on experience for some of the worlds most productive workers. During the same period the cost of real living has increased 500%. So what gives? Accumulation of debt whether housing, credit card, auto and [...]
Superficially, it was all smiles following the announcement of the September consumer credit numberwhich 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 [...]
by Chris Martenson
Paul Brodsky: The Seeds of Our Destruction Were – And Still Are – Sown In The Bond Markets
Paul Brodsky does not trust the bond markets. That position may seem strange coming from someone who has spent most of his professional career trading bonds, but it’s precisely this insider knowledge that has led him to start directing investors to safer harbors.
In fact, he thinks our credit system is so far [...]
Charles Hugh Smith
How did America become a land of debt-serfs? We can trace our debt-serfdom to three core dynamics which now dominate the American economy.To understand the transition from a state of minimal financial wealth/maximum freedom to one of debt servitude (illusory wealth and sacrifice of freedom for all that lifetime debt can buy), we first need to understand the gradual nature of this transmogrification.
It has become a cultural given [...]
by Phoenix Capital Research
While the mainstream media has numerous stories for why 2008 occurred, the real one is largely ignored because admitting it would mean admitting that the entire financial system is filled with crap and that none of these problems have gone away.
The truth is that the cause of the 2008 crisis was the black hole of finance: the derivatives market. A market that is so enormous (20 TIMES [...]
by Jim Quinn of The Burning Platform
It’s The Debt, Dummy
I think charts tell a story that allows you to disregard the lies being spewed by those in power. Below are four charts that tell the truth about our current predicament. The first is from http://www.mybudget360.com/. The austerity and debt reduction storyline being sold by the MSM is a crock. The total amount of mortgage debt outstanding [...]
Some lawmakers, judges and regulators are trying to rein in the U.S. debt-collection industry’s use of arrest warrants to recoup money owed by borrowers who are behind on credit-card payments, auto loans and other bills.
More than a third of all U.S. states allow borrowers who can’t or won’t pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start [...]
WASHINGTON (MarketWatch) – The percentage of banks in the United States expressing a willingness to make consumer loans rose in the first quarter to its highest level since 1994, according to a survey released by the Federal Reserve on Monday. The Fed’s Senior Loan Officer Survey for January through March also found that several large banks eased lending policies on credit cards and auto loans. Consumers increased their demand for [...]
By Christine Hauser, The New York Times – September 24, 2010
“The substantial drop in credit card debt in the United States since early 2009 has been widely attributed to newly frugal consumers. But analysts say that a significant portion of the decline is actually the result of financial institutions writing off billions of dollars in credit card debt as losses.
Consumer debt has been steadily falling over the last couple of [...]
No, this isn’t a trick question. Some people say the answer is “complicated,” yet I assure you that it is not. In fact, the end of a large bear market includes many indicators that are downright quantifiable.
The simplest answer to the question amounts to a nine-word sentence. But first allow me to show what the end of a bear market is by describing what it is not.
It is NOT [...]
I noticed in the credit card article (consumers “walk away”)…one “final” action that takes place…seems to be left out.
When they “walk away” from their credit card debt…it hits their “credit report”…which apparently means that the consumers are “walking away from credit”…(1) from the “cards”…(2)”auto loans”…(3) home loans…and any other situation requiring a good credit report…such as renting a home or apartment.
So…9 out of 10 of our citizens are now “un-creditworthy”…basically [...]