Statists and Banksters pass You the Bag


BREAKING BAD (DEBT) – EPISODE ONE

by JimQ

… The Federal Reserve issued their fourth quarter Report on Household Debt and Credit last week to the sounds of silence in the mainstream media. There were minor press releases (but) actual analysis, connecting the dots, describing how the massive issuance of student loan and auto loan debt has produced a fake economic recovery, and how the accelerating default rates in auto loans and student loans will produce the next subprime debt implosion, were nowhere to be seen on CNBC, Bloomberg, the WSJ, or any other status quo propaganda media outlet. Their job is … to keep their government patrons and Wall Street advertisers happy, while keeping the masses sedated, misinformed, and pliable.

Luckily, … dozens of truth telling blogs have done a phenomenal job zeroing in on the surge in defaults. The data in the report tells a multitude of tales conflicting with the “official story” sold to the public. The austerity storyline, economic recovery storyline, housing recovery storyline, and strong auto market storyline are all revealed to be fraudulent by the data in the report. …

(While total consumer debt is down, the non-housing portion of the) debt stands at a record $3.15 trillion. This is after hundreds of billions of the $2.71 trillion were written off and foisted upon the backs of taxpayers, by the Wall Street banks and their puppets at the Federal Reserve.

The corporate media talking heads cheer every increase in consumer debt as proof of economic recovery. In reality every increase in consumer debt is just another step towards another far worse economic breakdown. And the reason is simple. Real median household income is still below 1989 levels. … An economic and jobs recovery for working Americans is nowhere to be seen …

Total debt on the balance sheet of American consumers (declining from the peak) in 2008, … had nothing to do with austerity or Americans reigning in their debt financed lifestyles. (What happened was,) the Wall Street banks took the $700 billion of taxpayer funded TARP, sold their worthless mortgage paper to the Fed, suckled on the Fed’s QE and ZIRP, and wrote off the $1.6 trillion. Wall Street didn’t miss a beat, while Main Street got treated like skeet during a shooting competition.  …

The average American benefited in no way from the government/banker bailout. Their wages have deteriorated, their daily living expenses have risen, … while … the .1% parties like its 1999. Rising wealth inequality has been systematically programmed into our economic system by bankers and their bought off puppet politicians in Washington D.C. – Corporate fascism at its finest. … Every solution proposed and implemented since September 2008 had the sole purpose of benefitting the criminals on Wall Street who perpetrated the largest financial heist in world history. …

The issuance of debt by the government to people not financially able to repay that debt, in order to generate economic activity and boost GDP is nothing more than fraudulent inducement using taxpayer funds. Debt financed purchases is not wealth. … If adding debt produced economic advancement, why has the number of Americans on food stamps escalated from 33 million in 2009 to 46 million today during a five year economic recovery? Why have 10 million Americans left the labor force since 2009, pushing the labor participation rate to 30 year lows, during a jobs recovery?

Why have social benefits distributed by the Federal government surged by $2.5 trillion since 2012, reaching a record high of 20.8% of real disposable income? It resides 33% above 2007 levels and still above levels during the depths of the recession in 2009. But at least the stock market hits record highs on a daily basis, creating joy in NYC penthouse suites and Hamptons ocean front estates. American dream for the .1% achieved. …

(Meanwhile) the mainstream media spin fails to mention that $706 billion of consumer debt is currently delinquent. That is 6% of all consumer debt. … (And) the number of foreclosures and consumer bankruptcies rose in the fourth quarter versus the third quarter. … Donghoon Lee, research officer at the Federal Reserve Bank of New York, may … actually admits to being worried …

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning. …

And he didn’t even mention the increase in auto loan delinquencies which will eventually morph into a landslide of bad debt write-offs, repossessions, and Wall Street bankers demanding another bailout.

The pure data in the Fed report doesn’t tell the true story. … A critical thinking individual might wonder how national home prices could rise by 25% since the beginning of 2012, while mortgage debt outstanding has fallen by $220 billion over this same time frame, and mortgage originations are hovering at 1997 levels. …

It couldn’t have been the Wall Street/Fed/Treasury Dept. (scam) could it? New home sales prices and new home sales were tightly correlated from 1990 through 2006. Then the bottom fell out in 2006 and new homes sales crashed. (Now) new home sales (remain) 65% lower than they were in 2005, but median prices are 20% higher. This is utterly ridiculous.

If prices had fallen to the $100,000 to $150,000 level, based on the historical correlation, first time home buyers would be buying hand over foot. But the Federal Reserve, their Wall Street owners, connected hedge funds, and the Federal government has created an artificial price bubble with 0% interest rates and trillions of QE heroin. The 1% can still afford to buy overpriced McMansions, but the young are left saddled with student loan debt, low paying service jobs, and no chance at ever owning a home. …

If you haven’t made a payment in 90 days or more, the odds are you aren’t going to pay. … Mortgage delinquencies (are 3.2% today:) three times higher than the 1% average before the financial meltdown. … Home equity lines of credit (delinquencies are) sixteen times higher than before the crisis. … Do these facts scream “housing recovery”? …

The outlier on the chart is credit card delinquencies. The normal, pre-crisis level hovered between 9% and 10%. … During the Wall Street created recession, delinquencies spiked to 13.7%, but after writing off about $150 billion of bad debt and closing 100 million credit card accounts, delinquencies … have plunged to 7.3% …

This is a reflection of Americans depending on their credit cards to survive their everyday existence. With stagnant real wages and household income 7% below 2008 levels, the average family is using their credit cards to pay for food, energy, clothing, utilities, taxes, and medical expenses. They are making the minimum payments and staying current on their payment obligations because their credit cards are the only thing keeping them from having to live in a cardboard box. … Greg McBride, Bankrate.com’s chief financial analyst sums up the situation:

“Not only do most of them not have enough savings, they’ve all used up some portion of their available credit — they are running out of options. …

Who doesn’t have an unplanned expense multiple times in a year? … As many people found in 2009, credit card lines can be reduced in the blink of an eye by the Wall Street banks. This potential for financial disaster is why Americans are doing everything they can to stay current on their credit card payments. That brings us to the Federal Reserve/Federal Government created mal-investment subprime boom 2.0, which is in the early stages of going bust.

I’ll address the Subprime bust 2.0 in part two of this article.

(Read the whole of Part I with Charts)

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About icliks

Biding my time in central ms ... yours too, if ur reading this.
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