THE WOLF STREET REPORT: What’s Behind the Subprime Consumer Loan Implosion?

These are the good times, but why are subprime credit cards, auto loans, and short-term installment loans blowing out? (11 minutes)

By Wolf Richter for WOLF STREET.

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  170 comments for “THE WOLF STREET REPORT: What’s Behind the Subprime Consumer Loan Implosion?

  1. lt says:

    I wonder how many us workers have gig jobs, do we know? Being self employed, they cannot file unemployment so they won’t show up if they “lose” their gig.

    • Petunia says:

      The working on a “contract” portion of the economy is definitely bigger. All govt contractors work on contracts which can be renewed every year or every few years. This is also true in many large companies, especially in tech. The worst part of working on contract jobs are the non compete clauses which can restrict a worker from working anywhere in their profession or industry for one or more years. These are all unconscionable levels of financial repression.

      Max Keiser uses the term financial terrorism and he is right on the money. The political clown show has allowed all this to go on unchecked.

      • wkevinw says:

        Contract work in “old industries” is flat out cost reduction.

        This is caused by the same thing as all economic actions: competition.

        Competition in the labor markets changed with globalization.

        Pretty simple if you want to know about it (but facts often suppressed by the powers that be):

      • Trinacria says:

        allow me to add two more adjectives to your phrase “political clown show”….political EVIL and NARCISSISTIC clown show … this economy is fast producing more and more homeless. I am amazed (in a sad way) at some of the spots I see where these poor folks have pitched tents.

        • van_down_by_river says:

          I’m a fairly typical homeless person but I don’t live in a tent or leave needles and trash in the street. The people you see, who defecate in the street, steel shopping carts and leave trash strewn all around are mentally ill, but most of us are employed, shower everyday, launder our clothes and fit in at our cubicle jobs.

          There is a big difference between people suffering on the streets because of mental illness and those of us who simply didn’t own a home when Ben Bernanke raised the cost of housing beyond what a wage earner can afford in many areas. I meet many like myself who will never afford housing until we can retire and leave the country and I think we far outnumber those suffering mental illness but we are unseen. Homeless is now understood to mean a mentally ill person living on the streets maybe those of us who are Bernanke refugees should be known as “home free” to avoid confusion.

          I look on the bright side: being unable to afford any housing means I pay nothing for housing so at least I’m able to save and continue to purchase stocks and Powell has guaranteed substantial, zero-risk return for those of us who follow this path. There are few guarantees in life so you can bet I’m accepting Powell’s offer of free wealth – wealth that’s being extracted from those afraid to invest.

          It’s only a bubble if it pops. It will never pop. It’s not a bubble.

        • Trinacria says:

          To: Van down by river:
          thank you for that clarification as I had no idea and never would have known that about being “home free”. Also, I do enjoy reading your posts and your insights.
          As far as the bubble “never” bursting…I believe that I read that during the 1987 crash, then Greenspan was buying all the way down and also during the 2000-03 crash as well. I would think the Bernank was doing the same thing during 2008-09. So, do you truly believe that with all record debt levels at gov’t, corporate and household, we are now at a “permanently high plateau” as the Fed chair Fischer proclaimed in Sept. of 1929…
          Take care and all the best to you.

        • The motorcycle guy says:

          Just to add to what van_down_by_the_river has said;
          I, too, chose to live in a large truck when I am in the USA. I used to come back for six months each year but that will shrink to just two months starting in 2020. My brick and mortar home is in an Asian country.

        • alex in San Jose AKA Digital Detroit says:

          The “visible” homeless are the 10% or so who are not doing well and no longer care or don’t have the capability to care.

          That guy taking a sudden dump on the street, well, heroin addiction and also alcoholism can result in situations where you suddenly have to poo, like NOW.

          The US’s preferred method of treatment for mental illness is to cast the mentally ill out onto the street to survive, or not. So you’ve got that contingent.

          Plus being homeless, period, will cause mental illness, at least depression, in all but the strongest.

          The vast majority of homeless, you can’t tell are homeless.

      • Rowena says:

        I was watching Max Keiser who was interviewing Professor Keen, who counts Dr. Michael Hudson as an associate. Keen told Max that it’s not the national debt that will cause the US to cave in.

        Instead, he said, it’s the growing private debt, by average citizens that’s the big worry.
        Once that debt grows far worse, somehow this can cause a massive collapse in The Economy.

        I wonder if Wolf agrees.

        • Wolf Richter says:

          I agree in terms of the national debt. It’s a long slow drip that can be controlled. In my estimates, business debt is the biggest issue, in every way, including magnitude. And household debt at the stressed layers of households is also an issue, but not nearly of the magnitude as business debts.

  2. Frederick says:

    What’s happening is 95 million of us are NOT counted in the workforce calculations and a lot of people are working low paying jobs with a pathetic minimum wage which cannot possibly support anyone in any reasonable lifestyle Good morning Wolf and everyone

    • Cas127 says:


      I agree that a lot of gvt metrics are politically calculated bullshit (unempl rate is defined so as to be fairly useless over last 15 yrs) but other more accurate metrics (employed to population 25 to 54) are getting strong as well.

      I wonder if subprime deterioration has more to do with lenders getting ready for big bath write-offs – lenders can manipulate noncurrent loans for a long – but not endless time.

      Bunching said write-offs together – at firm, industry, or national level – allows lenders to blame macro factors beyond their control for their crappy loan book – as opposed to shitty/corrupted loan underwriting on the front end.

      • Petunia says:

        I heard a commentary on a large European bank which we already know is in big trouble. They said the bad debts are not being written off but instead are being repackaged into new derivative structures. They know the debts are worthless, but by including them in new securities, they don’t have to disclose the actual losses.

        If the new derivatives don’t default the whole ugly thing disappears, like it never happened. Interesting, if it works.

        • Realist says:

          Isn’t it these papers that rating institutes slap an AAA stamp on and then these papers are sold to pension funds etc ?

      • Michael says:

        I can concur fullheartedly this is what is going on from my perch in the subprime industry. My employer is going all out by basically abandoning any underwriting standards whatsoever with an eye towards when everything blows up being able to lay off it’s biggest portion of headcount (branch employees) and going digital only. This subtext is in every external and internal communication said employer makes. I am Cassandra tho, I’m the only one I know who sees it for what it is. Either I turn out to be wrong and am still gainfully employed with said employer 5 years from now, a downturn doesn’t happen, or I am right and hopefully by then my efforts to immunize myself from said inevitability were successful and timely.

    • splat says:

      How can anyone expect to live off a minimum wage job?
      Seriously, if people want a better job then they need to find a way to get one(education, apprenticeship, OJT, military training)
      I have no pity for those fools who are whining about trying to support themselves, let alone a family, off a minimum wage job.
      It is not anybody’ fault but your own.
      Stop whining because you’re too stupid to move up in life.

      • splat says:

        This is for clarification:
        My last sentence: “Stop whining because you’re too stupid to move up in life.”
        Was NOT directed at Frederick, but intended for ANYONE who ever thought they could make a living off of a minimum wage.

        • Kent says:

          This of course assumes the economy is producing enough high-paying jobs that anyone who wanted one could have one with the right education/training/ambition.

          It might be true, I don’t know.

        • The Colorado Kid says:

          Splat, you need to look at Latin America for where we are headed. Everyday in this country there are less & less jobs that allow regular Americans to keep & maintain the so called Middle Class Lifestyle. Our hollowed out two party Constitutional Republic is really now just a defacto, single party, near totalitarian state which is controlled by a parasitic elite of large multinational monopolistic cartel “capitalists” who gorge on the ever increasing debt servitude of an indentured class: a classic Patron, Client State so familiar to Latin America. Both political parties are complicit in their collusion in allowing the unskilled illegals to come in and smack down wages for the working class, service oriented jobs, and now that they have accomplished that, we have unfettered H1b immigrants flooding in and killing the last remnants of what were formerly, relatively high paying IT & engineering salary positions.
          Splat, it’s a pretty sad day in America today when Folks who are doing well are so ready to castigate and hold absolute utter contempt for their fellow Americans and their plight to try and survive with a modicum of dignity in a America that is seemingly at war with the former salt of the earth workers that truly did make America great and now are watching everything they worked for and believed melt away.

      • Unamused says:

        Stop whining because you’re too stupid to move up in life.

        Right, stupid people who can’t afford medical care, with three part time jobs, student loan debts, feral children, and elderly parents to take care of. If they weren’t so stupid they would have picked wealthy white American parents. Instead they picked poor Hondurans or Syrian refugees. What were they thinking?

        At least you’re not blaming people for being lazy or morally defective. At least, not under this handle.

      • Gregory Hamilton says:

        Not everyone has the same opportunities you may have had. I’ve noticed the compassion is looked down upon by the so called elite, and they are trying to make it go mainstream. It looks like they are succeeding. I guess I’ll just have to learn Klingonese to fit in.

        • Unamused says:

          Ferengi. Klingons don’t have the lobes and believe in honor.

        • rhodium says:

          A republican spots one lazy person, suddenly compassion is a political issue that must be rejected. If not for rule of law what kind of Hobbesian nightmare would we live in when so many people no longer care about anyone else. The poor increasingly steal to survive (not a crime according to John Locke) and the rich would just as well leave the proles to a life that is “nasty brutish and short” as Hobbes put it. Look, a lot of Americans might very well be fine at this point saying screw the system and start a homestead out somewhere, but even that is not an option anymore because all land you could subsist off of is generally owned and too expensive for a prole.

      • alex in San Jose AKA Digital Detroit says:

        splat – if you can get 8-12 people all working together, they can do OK on min. wage even buy a house.

        Americans are far, far, too hyper-individualistic to do this, so it is mainly done by immigrants who understand the power of working together. Not saying they’re perfect, but they’re not as suckered into social Darwinism.

    • paul says:


      Most of the 95 million “Not in the labor force” are retirees, school students, stay at home parents and disabled persons. They are not either able or available for work. Those types of people have never been counted in the unemployment rate nor should they today.

      • Frederick says:

        Paul I know I’m one of them who decided to call it quits earlier than I would have liked because the availability of decent paying work was poor back in 2014 Expatriated and couldn’t be happier with my decision as long as my SS keeps coming and the dollar stays strong I’m good

    • Trinacria says:

      Of course the “statistics” are skewed …as the old saying goes “figures lie, and liars figure”…

    • Mike says:

      Amen. Also, many have given up getting reasonable jobs, which disqualify them from government benefits, and just live off of illegal or marginal, unreported, cash-paid work: e.g., waitresses for small businesses, drug dealers, etc.

      • alex in San Jose AKA Digital Detroit says:

        Getting that 10 years in that you have to, to collect Social Security is becoming less of a given.

  3. John Taylor says:

    I really think you’ve got something here … the workers living paycheck to paycheck seeing large rent hikes and health insurance hikes, along with sharp increases in borrowing costs.

  4. John says:

    Hey Wolf, Fake accounts and fake write downs? Nothing would surprise me no more.

  5. TruckMan says:

    The data is worse than useless. Hedonic adjustments are invalid if the original quality options are no longer available. Who counts as unemployed is laughably inaccurate as a measure of who actually is unemployed. GDP measures endless amounts of useless Government spending as “productive”, etc.
    With respect Wolf, you don’t know what’s wrong. Neither does anyone else, as there are no accurate data to base any reasoning on. We’re all guessing, including governments. Only governments have the ability to set valid data criteria, and to gather the data. They absolutely are not doing that.
    We are all forced into trying to use anecdotal data to guess what’s going on. I will give you one: Other than groceries and one supplier of building materials, I haven’t had a receipt all year. Firewood, electrical work, auto repair, roofing, parts; I pay cash, and even guys who used to give me the occasional receipt aren’t doing that any more. I have no problems without a receipt, as they are all as good as their word and will fix anything if necessary. The people I use are all highly experienced/qualified, just mostly working on their own account, some with a regular job also. And of course this is all yet more economic activity that isn’t being measured.

    • Paulo says:

      Here is some anecdotal information/data that illustrates how close we are to a tipping point, imho.

      This past week the last big forestry conglomerate on Vancouver Island shut down indefinitely. They operate mostly on their own private land so there is no stumpage or auction charges on their harvesting costs. The other main conglomerate has been in a strike for the last 5 months. This is after a 10 year run of massive production/employment/growth.

      The last time I saw a downward movement this big was in in 1981 and that was one helluva recession for North America. What does this portend? Canada supplies about 27% of the US softwood lumber market used for new construction. Sales are predicated on looking forward at least 6 months. Simple math.

      A lot of us are doing just fine around here, my family included. But more and more people are not and the effects will knock ever onwards to other sectors. And if people are carrying debt and finance charges, well, the math gets pretty simple.

      Guess what class, we get to practice our negative integers!! Whoopee.

    • Winston says:

      On hedonics:

      The Illusions of Hedonics


      Quality, so the BLS determined, has many aspects. For this purpose they run a so-called hedonic regression through their computers. Whatever the type of regression that gets applied in order to calculate the “true price”, first of all an official from the BLS must determine whether a certain feature constitutes a quality change or not. Ludwig von Mises observed this problem long ago:

      “All methods suggested for a measurement of the changes in the monetary unit’s purchasing power are more or less unwittingly founded on the illusory image of an eternal and immutable being who determines by the application of an immutable standard the quantity of satisfaction which a unit of money conveys to him. It is a poor justification of this ill-thought idea that what is wanted is merely to measure changes in the purchasing power of money.”3

      It is quite obvious that hedonic imputations open the way to all kinds of manipulation. Given the implicit pressure that governments and central banks want to hear low inflation rates to be reported, due delivery would suggest to search mainly for quality improvements, and to calculate these even when they are of a dubious nature.

      • van_down_by_river says:

        The way you solve the inflation problem is to simply state there is no inflation – problem solved. The cost of living goes up relentlessly but we can take comfort that, at least, there is no inflation. Just imagine how bad things would be if we had inflation along with higher prices – one can only imagine.

        Unfortunately we still must always worry about deflation. No matter how high prices go the deflation problem continues to mount. It’s all the fault of those evil savers! The savers must be made to pay! Legard and Powell must make these evil savers pay! To the gallows with them, they have our stuff, let’s take it back.

      • Bobber says:

        Do you know if the hedonic adjustments for each item are transparent and available for public viewing, or are they contained in a black box somewhere that nobody can see?

        I think the answer to that question says a lot about the government’s ability to manipulate inflation statistics.

        There would be no excuse for lack of transparency here.

    • I agree completely, the amount of work being done is far greater than the work that is counted. If that work were counted and taxed, at a fair value the government would not be running such huge deficits and GDP would be double what it is now. If people doing uncounted work were paid fair market value that would result in massive service economy inflation, but you can’t really count it as inflation if workers are getting a fair wage. People working for less than a living wage, are another issue altogether. In previous cycles they referred to this as the underground economy, and they tried to root it out, using the bureau of equalization. Now it’s much larger and more pervasive. It amounts to a permanent subclass of people. Imagine if people working under the table actually had discretionary income? Hard to imagine what the inflation rate would be without the minimum wage law. Everyone would be yelling about the depression. So Fed has its inflation benchmark to protect us all from the truth.

      • TruckMan says:

        I follow your argument, but I’m not sure I agree with the conclusions. The people who aren’t officially working aren’t being legislated or administered by government. If the underground economy were known about, the government would likely be running even bigger deficits, due to its fundamental inefficiencies. Furthermore, many of those people would not be working as the government would rule their operations illegal, and there wouldn’t be as many customers as they, with the regulatory and tax overheads, would now be priced out of the market.
        And the Fed benchmark is no such thing; it doesn’t measure real inflation any more than any of their other “benchmarks” measure what they purport to.

        • It’s a benefit to the corporations, and businesses, who exploit labor which allows us to make these laughable trade deals with China (when the chickens have already come home to roost) after several decades of labor abuse. What will they do next, pass a law making it a crime to lynch negroes?

    • Crush the Peasants! says:

      “Hedonic adjustments are invalid if the original quality options are no longer available.” Bingo! In this case, consumers who can’t keep up have been made obsolete.

  6. Jeff Relf says:

    The poor-n-obscure are about to elect
    a ( poorly thought out ) rescue.

    March 17th… save the date, Ray Dalio, because that’s
    when we’ll know who Florida wants as its candidate.
    Ray spent 1.5 billion dollars to stop the inevitable dip.

    “Free” healthcare means insufferable waiting in line,
    like like they do in Venezuela, hoping to get gas.

    • timbers says:

      Funny, the free healthcare you say causes lines doesn’t cause line in UK, France, Canada, Germany, Austria, Holland, Belgium, Norway
      Sweden, Japan…etc etc.

      Venezuela is suffering from illegal U.S. sanctions, not it’s good healthcare policies.

      Remember, for every $1 we spend bringing Medicareforall to ever single person in the U.S., we save $2 that we can spending on something else. Plus, Medicareforall dramatically lower job costs to employers located in the U.S. This will allow us to bring jobs to American from overseas and MAGA,


      • robt says:

        It’s not free. In Canada, it’s about 600 dollars a month, per person, in taxes and annual premium payments. Also, there is a growing list of supplementary charges, and rationing. So it takes months of waiting for certain procedures; that’s why a lot of people just go to the States for treatment (most especially, the politicians. If they don’t go to the States, they have dedicated private clinics, Soviet-style). Even just getting an MRI could take months of waiting; if you go to Buffalo, you could have it in the next day or so. Someone from the States tried to offer instant MRI in Canada. It’s illegal; they were served with an injunction and threatened with large fines. Under federal law, private clinics are not legally allowed to provide services covered by the Canada Health Act. Regardless of this legal issue, many do offer such services.
        Other countries have income tax rates up to 60% and Sales Taxes of 25% for services and retail purchases, and similar waiting lists and restrictions. There’s a reason for that.
        Infinite demand and finite resources.

        • timbers says:

          I know it’s not free, but many critics of government healthcare call it free. I use their free term for continuity.

          Regarding lines, here is USA we got a line that never moves and shatters anything you can point to in Canada:

          50 million of us who have no access to healthcare of any sort. Those 50 million are in a line that never moves. They will be waiting in that line until they die from lack of care

          Can you in Canada even begin to compare you list to that?

          Of course not.

          And don’t forget those in USA who put off treatment who can’t afford it. There in a line, but they don’t get counted.

          And I’m not sure you’re painting an accurate picture of Canadian wait time. I’ve read the so called lines are about equal to as in the USA. We too have to wait, and our waiting is often determined by insurance companies.

          Finally, it’s great Canada has folks who can afford to pay for MRI’s. Maybe the can donate to the many in the USA who can’t and have no access – like that 50 million I mentioned, plus the tens of million more of us Americans how have high deductible insurance plans and have to pay for MRI out of pocket anyways even though we have insurance, be the plans that have reasonable deductibles are too expensive.

        • Harrold says:

          Next day? You had better make sure that MRI was in network and that you have already met your deductible for the year or it will cost you plenty of $$$’s.

        • bungee says:


          Can you in Canada even begin to compare you list to that?

          canadas entire population is only 38 million…

          scale matters. 10 times the population changes the equation. i have an opinion on the right way to do things, but its only an opinion. Naive, overly-simplistic solutions that will only work once were all ‘on the same page’ are going to be dead on arrival. you’ll see. and people like some posters here of a conservative bent, have valid concerns of programs doing more harm than good. I mean, look at the ACA.

          our medical system is going to implode. you have the right to care for your health. start today. dont drink. dont smoke. eat lots of fresh fruit and dark green leafy vegetables. if you have any ailments or conditions, learn as much about them as you can from all sources, including non-establishment ones. do not plan on medical care getting less expensive.

        • Frederick says:

          Timbers Americans can afford MRIs Just find discount MRIs online I needed one and got it for 250 dollars in 2015 The clinic was in Manhattan and very short wait maybe two days You have to pay upfront though so maybe that precludes 25% of Americans from using that

        • alex in San Jose AKA Digital Detroit says:

          If the $600/month is being taken out of your taxes, and it’s $600/month for “free” health care or $600/month to bomb brown children overseas, what skin is it off of your nose?

          I’ve had more than one person from overseas tell me that after the dust has settled, the taxes + expenses for health care etc in the US is a worse deal than it is in Europe.

          I make $15k gross and my “tax” (a fair amount is payment into Social Security and Medicare) is almost $3000 a year so it’s essentially 20% off of the top. In theory I got Medicaid for this too, but I don’t.

        • Arctic Chickens says:


          If your solution is anything other than: totally gutting the regulatory bloat that skyrockets medical paperwork and prevents doctors from having a “car practice” if they desire, breaking up the thousands of local monopolies formed by medical consolidation, and finding a way to deal with malpractice that doesn’t costs hundreds of thousands in insurance for a practice per year, then forget about it. The government created this situation by making the system absurdly inefficient while aiding the oligarchs in consolidating the whole thing, all in the name of “protecting” us.

          You know why there’s a doctor shortage? Because somehow we came to this drug deal arrangement where the Feds pay for many post-school residencies. The feds are the ones who got involved and now have refused to increase the residency number for 30 years – I wonder why there’s a doctor shortage?

          My great grandfather was a doctor. Died a decade ago. He practiced all the way through this chokeout of the family doctor. Requirements put in for paperwork, facility, etc etc. Minimum practice requirement used to be a car with a big trunk and your degree. Now you need a big building and 3-5 employees under you, and there’s an hour of paperwork the practicioner has to do for every hour of care they give.

          I wonder why it’s so fucking expensive, huh? Well the government fucked it up, now we better go ass up and let them take their due.

        • BLIZZARD says:

          Well said and here’s the real problem. In Canada we like to pretend that we live in a Capitalist society but really and truly we live in a Socialist Society. The Gov’t collects all this money from taxes and then redistributes it to everyone to even out the playing field. But the whole premise of taxes and how they are collected is fundamentally BS. Income tax is the most unfair tax of all. Why, because first of all not everyone pays it. The rich can hire a good Accountant and take advantage of all the thousands of loopholes and pay very little. Farmers, fishermen, contractors, people on contract work, consultants, etc. etc. etc. write off everything and pay very little. The only guy paying income taxes are the people doing jobs where the tax is deducted at source so they can’t get out of it. Likewise property taxes are unfair. Why should you have to pay a tax just because you own a house. Totally unfair and a huge disincentive to build a nicer house or renovate. I could go on and on but let me just end with saying what I think is an excellent and fair example of a good tax and the best way for Govt’s to raise and collect money. It’s called the “sales tax” or in Europe the “vat tax”. Everyone pays this tax and the rich pay more because they buy more. It should be hidden and included in the price of every transaction so you don’t even see that you are paying it. All the money would be collected by the Fed and then redistributed to each Province based on population. Simple no fuss, totally fair to everyone and does not act as a disincentive. One tax that’s it and do away with all other taxes and fees period. I welcome your comments and rebuttals.

      • Realist says:

        Well managed “free” health care systems provide usually quite good care in most such countries.

        Then there are countries that have manged to f**k up their “free” health care, for example Sweden where:

        -lately they have been forced to cancel scheduled surgery for weeks in most public hospitals due to lack of basic essentials such as rubber gloves etc.
        -they have shut down maternity wards, the solution has been to teach women how to give birth in cars when on their way to hospital a couple of 100 kms away.
        -patients are transported to Finland to give birth, receive acute surgery or cancer treatments
        -In Stockholm (the capital) 100s of nurses are going to be fired from their main hospital due to lack of funding ( the state pays using taxpayer money)

        just to mention a few examples,

        This in a country that offers dental work to illegals for 50 SEK while many ordinary retirees can’t afford it, according to EU stats 300.000 Swedish retirees live at or under the level of EU’s definition for poverty ….

        • El Kay says:

          Medicare for All: I guess people think that Medicare is “free”. It’s not. Part A (hospital) is “free” but you have a deductible of $1,408 (2020) and coinsurance of up to $704 per day once you’re over 90 days in a hospital.

          Part B (medical providers) $144.60 per month removed from your SS check. This also has a deductible and coinsurance ($198 deductible and 20% coinsurance of Medicare approved amount). The latter part only applies if the provider accepts Medicare “assignment” (aka negotiated rate). Keep in mind that Medicare may not “approve” of tests / treatment that your doctor prescribes. You eat that in its entirety. Your “Medigap” policy would cover zero (if you have one) of the non-approved treatments. The Medicare premium is income sensitive and doubles at @$170k for a couple. (@$87.5K single). IIRC, it doubles again at higher incomes.

          Part D: (Drugs): Varies by plan. My plan is $40 a month with a deductible of $400 some dollars. If you income exceeds a certain threshold (like when you take your mandatory distributions from your 401K) the rate increases substantially.

          The Medigap policy my wife and I have is $135 per month each. That fills in the 20% coinsurance on Part B and coinsurance on Part A.

          Then there’s the “donut holes” in the drug coverage (they pay nothing).

          Medicare is a Rubik’s cube…. the rules are as clear as mud and you have to call, verify, etc., ad nauseam to not end up with “surprise” billings (like non-covered services). Miss an initial enrollment date? You’ll be charged a surcharge for the rest of your life. It’s similar to navigating the IRS tax code.

          So… for us… when we add it all up….. we’re paying $320 EACH per month (plus all we paid in over the years of working) and that’s if we don’t use it. If we do use it, the costs go up dramatically. When you annualize the fees, it’s $7,500 a year (and we’re still “young” – Medigap premiums will go up as we age). Plus they keep getting rid of the better plans and, as the pool of insureds drop, the costs of the better plans rise.

          So…. I ask you…. how does “Medicare for Everyone” solve any unaffordability issues? If a couple can’t pay for Obamacare how are they going to absorb these costs?

          Oh.. FYI: We have found that going on to GoodRX to check prescription prices is far better than many of those available on our Part D coverage. Anything that is not generic is nuts. As an example, my wife was prescribed a cream of some sort that her Part D provider wanted north of $1,400 for. Yes. $1,400 for a 30 gram tube of ointment. I dug around on that website and found it for $87 at Walmart with their coupon. CVS was @ $500.

          Another thing that people seem to forget is that pharmacies in countries like Italy can dispense prescriptions without a doctor’s visit. That’s one of the “gotcha’s” here in the U.S.. You pay twice…. once for the doctor to get the script and once for the pharmacy.

      • Gadi says:

        Medicare for all, but it doesn’t save any money. You can see from Warren’s plan that it costs $20bn over 10 years, and many think her guestimate is too low.

        The only way to save money, is to reduce the cost of the providers. That can be done no matter who is paying, but it’s not at all clear it can be done at all.

        • Weary Patience says:

          Disable direct-to-consumer advertising/marketing of drugs in the states. Poof! There’s billions of savings for companies to lower their prices… plus the US is one of the only two nations (New Zealand is the other) that allow such madness in the first place. As a side benefit, there’s less annoying commercials.

        • alex in San Jose AKA Digital Detroit says:

          Preventative care saves money.

          This is the same thing as the housing-for-all model for homelessness. It costs something like $50k a year to keep someone miserable on the street, or half that to put them into housing.

          The same thing goes for medical care. Vaccinations, screening, catching things early. Preventative care saves tons of money. The only problem is, it’s less *profitable*.

    • Tonymike says:

      Hey Jeff,
      You ever been to Venezuela or any of those other insufferable countries with free or nearly free healthcare like France? Just another rich snob, trolling for the rich, like a good quisling.

      • timbers says:

        I noticed frequent comments – even from those who own the blogs themselves – attributing Venezuela’s problems to what ever program they don’t like (i.e. free healthcare ranks high).

        Apparently it never occurs to them American sanctions have a big/major part in most of the problems that nation has.

        • FluffyGato says:

          Venezuela did an admirable job of running their country into the ground (and then some) *long* before US sanctions.

    • Paulo says:

      hey Jeffmeister,

      Last week I popped into our free healthcare system. I made an appointment two days before, saw my GP at the booked time, had him look at my dodgy shoulder and asked for the Movember easter egg exam. All good on that front and left knowing I had tendonitis in my left shoulder and armed up with a prescription and referral for physio. All this at 50% of what the US system spends…if you are lucky to have coverage.

      Our insufferable country, Canada, is a pretty nice place to live. Honest. :-)

      • Trinacria says:

        I don’t know if Canada’s health system compares to the (free) health system of Italy, however, from several uncles who are physicians in the Italian system as well as many cousins who use the system, the word is basically….good for small stuff (like your appointment) but not so great on the big stuff (which is where the waiting time comes in…)
        In the US our system is definitely expensive. When “they” tried to fix it in 2011 or so, they made it even more expensive. Back to Italy, my physician uncles over there are amazed the system is still standing. FYI, for what it’s worth.

    • sierra7 says:

      Jeff Relf:
      Having been in communication for decades with ordinary people sailing ordinary sailboats to all parts of the world I’ve never ran across a story that was very negative at all regarding their encounters with health issues in most all the foreign countries they visited……most were astounded when they were able to leave hospitals, emergency rooms, doctors’ offices, etc…..that the bill was either ZERO or they paid a very small amount. These are all first person accounts that could be attributed to “anecdotal evidence” but that evidence is overwhelming. We need to stop the propaganda of foreign healthcare services being “bad” or “not up to US standards”. Quite the contrary is the true story.

    • van_down_by_river says:

      Healthcare in the US is a scam, a wealth extraction game. The healthcare industry in the US could care less if you drop dead so long as you hand over everything before they dump you in the dirt.

      The problem will not be solved by pretending the government can pay for everyone’s exorbitant medical bills, healthcare costs must be brought back down to 5% of GDP from the current 20% and growing. For that matter, why do doctors spend 11 years in school – what a joke.

      A trade school could train a reasonably intelligent person to do heart surgery in 6 months, doctors can study Plato on their own time. The whole system is a joke, costs are out of control and much like government spending the nation is unwilling to address the actual problem. This is how nations collapse. You can go down with the ship or begin looking for a life boat, I would stick around and try to repair the sinking ship but the situation is clearly hopeless. Yo voy a huir.

      • Frederick says:

        Van I totally agree The healthcare system is broken in the states No doubt about that I was blessed to have a neighbor and friend who treated me for my entire time living in NY and he hated the system with a passion Great old school doctor A dying breed sadly

    • Dorre says:

      Venezuela’s oil reserves are larger than Saudi Arabia’s, and they also sit on other very valuable natural resources. They decided they didn’t want the US corporates to control their country, and now are suffering through US sanctions. Yes, there has been enormous mismanagement as well, but Venezuela could be as rich as Saudi Arabia, if only they installed a US friendly king, or at least a fascist dictator.

    • The Colorado Kid says:

      Jeff Relf, a big part of why Venezuela is suffering is the fact that they are a Gas Station and Uncle Sam (that inveterate M’fker) just shut them the he’ll down… and why?

  7. timbers says:

    Well, let’s all put on our Federal Reserve Bank hat and ask ourselves “what would the Fed do to solve this problem thru policy?”

    Isn’t it obvious? The Fed should use it’s daily repo operation to buy up credit card debt and suppress rates to 0% or whatever is the overnight rate.

    Consumers will pay almost 0%, never reach a limit, and can go on spending.

    After all, that is simply the policy the Fed is trying to implement per it’s words. This solution allows it to do so.

    • Iamafan says:

      Why is this (and the repo) the Fed’s problem?
      The mandate is low inflation and low unemployment, goals already met, so they say.
      Maybe the repo market is just another excuse to do massive stealth QE.

      • Lance Manly says:

        I am still trying to figure out why they are cutting rates when the mandate is met. They are not going to have any ammo when they need it. Check out the Cleveland Fed’s CPI and it is easily seen that there is no upcoming issue with deflation.

        • Frederick says:

          Obviously they know something that we don’t Lance

        • michael says:

          Because their rate hikes were unraveling the financial house of cards. Ignore their metrics and watch their actions.

      • Their mandate is the three M’s, monetization, monetization, monetization. (There are 3 applications) Getting tough to find wood, so they throw more paper on the fire.

      • historicus says:

        The Fed has 3 mandates, if anyone bothers to read the official statement…
        Maximize Employment
        Stable Prices
        Moderate long term rates.
        The Fed ignores the second and third.
        To promote 2% inflation is to promote price increases of 22% over ten years (compounding)
        The third mandate, promote moderate long rates….moderate means “not extreme”. Record low long rates are indeed extreme.
        And this is where you get the massive consumer debt problem. Savings is discouraged and borrowing is subsidized by the Fed policy of pegging rates below inflation, a stimulative policy with record high stock prices. Idiocy.

  8. David Hall says:

    The lowest 20% of US households had a mean income of $13,258 in 2017.
    The same year the highest 20% of US households had a mean income of $221,846.

    The subprime people are likely in the lower quintiles.

  9. Deanna Johnston Clark says:

    Is everybody forgetting drugs, alcohol, and other addictions? Those are hurting almost every family on the planet, and especially in the west.
    As this depression worsens, those will decrease, as they did after 1929….except for little neighborhood bars where people went to chat and talk about their troubles!!.

    • bungee says:

      not sure of your point, Deanna. Maybe a typo?
      In any case, drug and alcohol abuse are set to soar and suicides unfortunately to become more common. might as well add in domestic violence and the like. Think Russia in the 90’s. The sooner we clear this debt through dollar devaluation the better. The longer we try to keep it together, the harder it is.
      Also, in 1929 the U.S. still had a prohibition on alcohol which didn’t end until 1933 (coincidentally the year of a large dollar devaluation against gold). But that said, plenty of people still searched for answers at the bottom of a bottle. With the drugs available nowadays it’s gonna be downright scary. in some ways it already is.

      • Frederick says:

        Bungee Totally agree It must have been a typo For the life of me can’t see how the problem will get better not worse

      • The Colorado Kid says:

        bungee, actually 1932 for beer, specifically 3.2 by weight beer. It was due to lobbying by Augustus Busch and his backing of FDR in the election. He actually sent a bunch of beer to the White House.

  10. 2banana says:

    Not mentioned in this report is the dramatic rise of property taxes, local taxes, sales taxes, telephone taxes, state taxes, etc.

    That rent going up by 10%? That could be entirely due to property tax increases. Yes renters, you pay for “soaking the rich” property taxes.

    California has a top income tax rate of almost 13%

    Living in NYC will cost you cost you about 13.5% in combined income taxes for the top rate.

    Now add in a close to 10% sales tax and insane property taxes.

    The $200,000 couple example is losing at least $40,000 in local and state taxes in some locations.

    • Winston says:

      And, of course, artificially inflated property values upon which those taxes are levied.

    • Gian says:

      You are absolutely right. I live in the dark blue state of WA, CA’s bastard child. My assessed property value has gone up $160K in the past two years. I own rentals and those values went up as well and although I do not want to raise rents, I have no choice but to pass on these increases. Prices for everything continue to climb in order to keep pace with minimum wage increases and for most, disposable income is nonexistent. Those working for and championing minimum wage increases do not understand basic economics and at the end of the day are still minimum wage earners, with the same or less buying power.

      • Nat says:

        While it is unfortunate your assessed property value for the sake of taxes has gone up $160K in two years – there is little evidence that is the result of a minimum wage hike. Certainly some costs are going up with a minimum wage hike, but I have not seen any credible evidence that property is one of them. Something else is inflating your property values, and they would be up be more or less the same amount in an alternate timeline where the minimum wage was not raised in your state.

      • Ethan in NoVA says:

        Ehhh, sorry. Maybe the people on the top should give up a bit of profits. I see a lot of these businesses crying about the wage increases but their low paid employee is shoveling a lot of cash into the cash drawer constantly.

        I mean, I know the owner needs a 4th mansion and a yacht on the other coast but at some point something has to give.

        • bungee says:

          Ethan in NoVA,
          if you’re talking about publicly traded companies, remember that the ‘owners’ are the shareholders. So people with money invested in indexes, pension plans, 401k and retirement schemes and investors of all stripes are the owners. Management are thieving employees. But they understand that if the stock price goes up, the owners look the other way. So be careful what you wish for, because the ‘owners’ will soon give up a lot more than ‘a bit’ of profits.

          notice too that most if not all of these investors know nothing of how to run a business, yet they own a company. this ends badly.

      • Javert Chip says:


        Problem almost solved:

        California is going with state-wide rent control (assuming it’s constitutional), then it’ll quickly metastasize to WA.

        Piece of cake.

    • Nat says:

      “That rent going up by 10%? That could be entirely due to property tax increases.”

      Can you show me where property taxes have gone up by 10% as often as the rents have increased by 10% over the last decade?* Because if you can’t then no it can not be due to property tax increases.

      *FootNote if the assessment value goes up, while that results in more taxes are being paid that is not a “property tax increase” – the tax rates are staying the same the asset has gone up more in value which is not a result of “raising taxes” that is due to other effects.

      • Iamafan says:

        I think he (or they) really mean the “deduct-ability” of these taxes from Federal Income tax since they have been capped.

        • Nat says:

          Oh I could see that. In that case though, I would note the whole capped deductibility of real-estate was never a progressive “tax the rich” policy, it was always a “punish the liberal states” conservative policy so his/her complaint on it RE: “tax the rich” is still ridiculous and unfounded.

    • Prairies says:

      In the distant or not so distant future you might even see a carbon tax

  11. unit472 says:

    People who are stretched thin can only stretch so far before something snaps. CPI can be dealt with to some extent by doing without or shopping at thrift stores but when the government comes after you your options are limited. Government can come at you in a lot of ways. A red light camera sends you a $268 fine in the mail or a cop gives you a $300 speeding ticket. Maybe you deserved both maybe not but they won’t let you pick up trash on Saturday to work the fine off. They want cash or they will revoke your drivers license.

    Other immovable objects are utility/water district rates and fees. I remember getting an assessment for the paved and roofed area of my property to pay for new storm drains. No arguing over it or finding an alternative. Got to pay.

    Insurance is pretty much the same. You can’t drop your coverage so whatever you health, auto or property insurer decides what the new premium will be and you have to come up with it.

    • Lisa_Hooker says:

      I await an increase in tax rates to cover the “increased costs of assessments.”

      I note that the “market-based” property assessments in my area are not related to what you can get selling your property.

      I also note that the tax rates on said property assessment have been ratcheting up for the past several years.

  12. 2banana says:

    I have. Behind the “iron curtian” visiting family while the USSR was a major power.

    In Eastern Europe, which had the highest standard of living in the USSR.

    “Free healthcare” meant you bribed a doctor to see you, bribed the surgeon to get on his schedule, you purchased all drugs needed, you provided the sheets, food and even toilet paper for your stay in the hospital.

    The hospital room was clean but something out of the 1950s.

    But it was………FREE!

    • timbers says:

      2banana, you stick to those other blogs bashing free healthcare and don’t believe in global warming. They pic on Venezuela and ignore that sanctions are the cause, not their healthcare polices.

      Free healthcare (your term) give people longer lives, better outcomes, at half the price of our not-free healthcare.

      France, Germany, Norway, UK, Japan, Canada, Holland, Austria….etc etc etc.

      That’s what free healthcare gets you. A longer, better, life without the medical.

      What you call socialized medicine (a misused term because socialism is ownership of production so these nations do not actually have socialism in healthcare)….the world wide recognized Gold Standard of healthcare.

      And, it would dramatically reduce labor costs in America and bring jobs back, as healthcare is a huge expense and drag on job creation.

      You can’t fight the fact.

    • andy says:

      Exactly right. I had to pay cash in a “free” emergency room to have my nephew’s foot stiched up. They had nothing, not even gauze pads. Then everything magically materialized once cash was on the table.
      Dont forget you would buy all meds on black market, so no way of knowing what you’re getting.

      People like Tonymike will make everyone relearn it the hardway.

      • Cas127 says:


        This is increasingly true of USGovMed too – many med specialists allegedly taking Medicare/Medicaid won’t take appts from those populations in less than 8 months here in LV – waits of over a yr for rheumatologists are not unheard of.

        But a lot of these worthies keep ultra low profile lists of appt cancellations – which are only made known to “favored” patients. Guess what gains favor with med office personnel.

        Also, another major silent problem is that many specialists today are making so much in annual revenue, that they can afford to cut back significantly on office hours – relying on the inelasticity of med demand to increase their overall revenue as their prices soar.

        Price transparency is the key – and it is coming – but 55 years after the gvt med subsidy gravy boat started floating.

    • roddy6667 says:

      You had to pick an example from 30 years ago to bolster your opinion. The world has changed. Why not pick an example from one of the 34 countries who have national health care right now?

      • 2banana says:

        1. The original question was had anyone had first hand experience with socialized healthcare. And I did, very first hand. Even helped buy the drugs on the black market.

        2. The model has not changed from what the USSR used to provide, to what Venezuela currently provides to what nearly every dem candidate wants to shove down the throat of Americans (remember when obamacare was supposed to fix all this?).

        3. Places like France and the UK actually has a two tier healthcare systems. There is the “free” very basic healthcare and the private market in which most working folks pay for (or pay for private insurance to cover).

      • Cas127 says:


        The US med system is rotten – but stupid gvt policies can make it worse.

        After all, Medicaid/Medicare have been around for 55 years and the system has accelerated its crappiness in that time.

        I know first hand that there is an insane – and patient sickening – amount of gaming going on in the MA/MC programs – despite the fact that nearly a trillion is being spent in taxpayer dollars there each yr.

        The bottom line problem is the lack of effective oversight/accountability for funds spent.

        Patients don’t really hold the purse strings in those programs – the med industry buys off the politicians who do.

        A completely nationalized med system would put these problems on steroids.

        You’ll notice how government subsidies were put in place 50 yrs before price transparency rqmts were.

        In practice, US med socialism translates into taxpayer rape and patient abuse.

  13. Augusto says:

    The Financial masters of the universe cannot make anything, fix anything or do anything beyond fleecing little people. Whether it’s working with the federal reserve to pilfer savers, bankruptcy laws for student loans to make debt slaves or subprime to fleece the fleece-less (flesh will do), it’s all about monetizing every aspect of life and activity, to flow it into their pockets. The only real question is how long it will go on or how much little people will take, because these fiends will never stop until they have more+, never.

    • Unamused says:

      Remember what Newt said to Ripley: “My mommy always said there were no monsters, no real ones. But there are.”

      The drinks flow
      People forget
      That big wheel spins, the hair thins
      People forget
      Forget they’re hiding
      The news slows
      People forget
      The shares crash, hopes are dashed
      People forget
      Forget they’re hiding

  14. Joe says:


    One area never discussed is the free labor contribution in our society…volunteers. Or even the apprentice programs where schools sent free or a few bucks an hour.

  15. Its_me says:

    I guess the public resents TARP

    • Dale says:

      If they resent the $600B authorized by Congress to bail out banks, they must surely resent the $16000B (over 25 times as much) in secret loans authorized by the Fed to bail out the banks (including shadow banks) without any input from Congress.

      According to the GAO.

  16. Augusto says:

    Wolfe, what a hoot….as I am looking at this page this is what has popped up as an ad next to the comments….
    .”Canadadrives…CANADA’S EASIEST CAR LOANS, ANY CREDIT APPROVED, SHOP NOW”, Their caps, not mine. No doubt they’ve done their due diligence, I’m on Wolfe Street after all, must be solvent….too funny…

    • Wolf Richter says:

      Yes, “Google Humor.” Hard to beat. A reader once sent me a screenshot of a sushi ad next to my article on Fukushima.

      • Mike G says:

        On the BBC website, I saw a travel ad for hotels in Beirut next to an article about militias blowing up the city.

        • alex in San Jose AKA Digital Detroit says:

          What I love are the ads for WeWork.


    • Haha. Google humour is hilarious, but undeniably harshly and unrelentingly inappropriate. I assume that one day, AIs will be smarter than they are today!

  17. Anthony Aluknavich says:

    My daughter gets her house water through a Municipal Utility District in Texas (MUD it’s called). Normal family of three with probably less than normal water consumption. No lawn sprinklers, they watch what they use, etc. Pretty conservative. The MUD charges annual taxes for ….whatever?

    Her tax bill was $1,450.00 for the year while her monthly water consumption bill averages about $40. Nothing you can do about this tax scam unless you want to drill your own well, which the County won’t allow.

    • RD Blakeslee says:

      If one finally makes the hard choices necessary to get out from under, there are places where local tax increases are anathema (pols suggesting them are replaced) and your water is truly free. Our cistern has collected rainwater for 42 years now, and our cost has been for plumbing only.

    • Zantetsu says:

      From a Californian’s perspective, your daughter should not be cursing her high water bills. She should be praising her low taxes. $1,450.00 property tax bill for a year is absurdly low.

      I live in a single small 650 sq ft. apartment and my water bill is more than your daughter’s, but I don’t complain because I know that water is precious, especially around here, and those elevated costs encourage people to use the resource sparingly.

      More annoying is the fact that I have to pay $30/month for garbage service when I throw out maybe three trash bags a month, so I am paying $10 just to throw out a bag of trash. And our complex has a pitifully small recycling bin that is always overflowing, I feel like we’re all probably getting screwed somehow … being charged for more service than we are being provided.

      • Frederick says:

        Hey , nobody is forcing you to live there I got out of NY because of the ridiculous cost of living With the savings I can come back for two weeks a year and stay at great a Manhattan hotels, eat out and see lots of broadway shows Something I couldn’t really easily afford while living there

      • Kent says:

        I live in a 2000 sq ft detached house on a 1/4 acre lot in Florida. Annual property taxes is $1220/year. Water + garbage runs about $60/mo. The property taxes include payments for roads, police, fire, libraries, parks, the whole 9 yards. My electric bill averages around $80 ($100 in August, $40 in February).

        What torques me is my internet/cable bill $150, my cell phone bill ($90 for wife, son, & I), and auto insurance which is running about $180/month for 3 vehicles.

        And what REALLY gets my panties in a bunch is my health care costs: about $1800/mo between my employer and my share.

      • Lisa_Hooker says:

        I weighed the bags I put in my trash bin for a month. The trash pickup cost more per pound than filet mignon

  18. Unamused says:

    These are the good times, but why are subprime credit cards, auto loans, and short-term installment loans blowing out?

    The situation needs to be seen as a form of economic warfare, with the goal being further subjugation. People are easily suckered to get in over their heads and screw themselves. They know how to push your buttons. That’s what massive data collection and saturation advertising are for. The rest can be coerced, and ultimately forced, with any of a variety of monopolistic techniques designed to reduce the income and increase the costs of the target population, restricting choice to the point where you have little or none.

    Don’t believe me? Try buying a vehicle, or entertainment, or an appliance, or a service that doesn’t involve relaying your information to those who want it to exploit you, all the while trying to persuade you that somehow it’s for your benefit, and not theirs.

    It works in any country, but it works best in those where the people can be flattered into believing how awesome they are, even as they’re going broke, losing their morals, and losing their freedom. If someday you decide you don’t want to play a game you can’t win you will quickly discover that you really don’t have much of a choice.

    Your masters can’t run out of money. You can.

    • 2banana says:

      Ummm….buying a used car. For cash.

      Oh wait, you were talking buying things you can’t afford or without saving for them first.

      “Don’t believe me? Try buying a vehicle, or entertainment, or an appliance, or a service that doesn’t involve relaying your information to those who want it to exploit you”

      • Unamused says:

        Oh wait, you were talking buying things you can’t afford or without saving for them first.

        I’ll make my own comments. You’re too inclined to misrepresent my utterances.

      • Kent says:

        My wife has a girlfriend that got a second job, part-time, at the Disney store in an Orlando area mall. She is very excited and will be making around $10/hour. I told her that at a vehicle depreciation rate + gas of 50 cents/mile on a 90 mile round trip it’s costing her $45 just to drive over there. And tolls are $5 each way. So she has to work 5 hours just to break even.

        She looked at me with big questioning eyes, then changed the subject to how she needed to buy a new car cause her old car is too unreliable.

        A significant portion of the population is simply too stupid to make rational economic decisions. Whomever is giving this poor girl this job and selling her a new car are doing a profound act of evil.

      • DF says:

        You still have to register the car with the DMV, and lots of them sell your info.

    • polecat says:

      They can, however, run out of corpuscles ….

  19. Iamafan says:

    The first 42 day Repo just got created this morning. What’s next? Helicopter money coming soon?

    • Frederick says:

      Yup and hyperinflation soon thereafter Got GOLD?

      • Lisa_Hooker says:

        No hyperinflation as long as wages remain suppressed. Note that the $15 minimum wage is a red herring. It will be a politically set low-wage cap not really a floor. “Hey, shut up, we just gave you folks a raise.”

        • bungee says:

          the fate of the dollar does not hinge on the minimum wage. rising wages do not cause hyperinflation. those come at the end. loss of confidence in a currency is the cause. and its not because everyday working folks lose confidence. it’s because big players, like other countries lose confidence… look at Wolf’s series regarding who is buying US treasuries and pay attention to the “foreign official” line of the TIC data. The writings on the wall. The foreign governments have been uninterested for years. We’re one big stock market correction away from emergency debt monetization. The foreign public sector will balk. The private sector will flee. But still the fed will print. And still the gov will spend. THEN people will get a raise. but it won’t matter at that point. they’ll be way too late. they always are. Frederick’s question is worth answering.

      • Serge says:

        It will be deflation in asset prices first. As prices rise for necessities, more and more people will be obligated to sell what they don’t need. Gold, silver, guns, jewelry, etc all of these will go first. When you left with a choice to buy groceries for your family or pay your mortgage the choice is obvious.

      • Its the right setup, in energy the drilling sector collapses, HY market craters, (UST crisis at the core) when drilling stops energy prices stop. Fewer energy exports to China, imports costs rise, while people in the US are losing jobs (energy sector related). Wind down a foreign war, government spending, impeach a president and you have the 1970’s. Gold did very well.

  20. Old Timer says:

    Great job Wolf.

    There are so many specifics I could give but choose not to for obvious reasons. Not to be a broken record, but this thing is coming uncorked in my neck of the woods. I travel multiple counties here in the Ozarks every day and what I am seeing is worse than in 07 and 08. I am NOT a pessimist nor do I look forward to this crash, but crashing it is. What I have feared for decades is now unfolding and it is picking up speed. What amazes me is how so many are blind to it and then the day comes that it kicks their front door in and says hello.

    Because I care, I have attempted to warn but to no avail. And wouldn’t you know, just in the last several weeks I have been contacted by phone four times by four different men. “Hey, what was that you were saying?”

    They tell me of their dire financial situation or maybe something they have seen that hit close to home. But always the same, they had to get hit right between the lookers before it registered. This crop of young men we have today? Well, their cornbread is not quite done in the middle. And that scares me because this thing just gets worse from here on and the learning curve is just too severe to figure out in short notice.

    In the Great Depression men and women here in the Ozarks were survivors. Almost everyone had a milk cow, a hog, a few chickens and knew how to butcher and just live. Now, this new crop of pecker-woods get near run over with that dumb smart phone stuck in their face. Scald and scrape a hog? You just as well be speaking Chinese.

    • RD Blakeslee says:

      Fortunately for me O.T., The Appalachians aren’t the Ozarks. We’re too hick-fied – live too far from the fancy cities.

      ALL of the things you mentioned in your last paragraph are still done here.

      • Iamafan says:

        They are both beautiful. I consider myself lucky to have lived in Tennessee and am still married to an “Arkanese”. I think living in the South or the Mid West gives people who live in the Coasts some perspective that’s rather rare.

      • Unamused says:

        ALL of the things you mentioned in your last paragraph are still done here.

        Hog bristles make excellent brushes, but the guts don’t make good strings. even wound with silvered brass, although the bass viol players seem to like them.

      • Old Timer says:

        Good to hear that Blakeslee, I sold a team of mules for logging in Tennessee and I did notice that, a lot of good folks there. I still use a mule in the garden, (Wolf has a pic) not that I have too but because I enjoy it and a horse or mule doesn’t pack your garden like a tractor.

        I enjoy reading Wolf’s analysis plus a lot of knowledgeable people on here. Wolf allows me to post comments even if I am odd as a square turd. Kinda like shooting a shotgun at a 500 yard target, it aint doing no good but the blast makes me feel better.

        • gomer says:

          put a slug in that shotgun and shoot a few meters high, you will hit a man size target

    • Zantetsu says:

      I am quite certain that if the sh** hit the fan and it came to that, I could learn to scald and scrape a hog in a few hours or days at most. Or feed chickens or butcher them or whatever. There is a reason that all of that stuff can be learned on the job with little instruction beyond mimicking what someone else is doing.

      Now you try to learn to program a computer competently. I guarantee it will take you months of effort at a minimum.

      Just saying.

      • Upstate says:

        Not quite as simple as you think. I have had chickens ( eggs only) had horses, heated with wood and milked a cow for a week.
        There is a lot to learn in all of this.
        Mistakes can burn your house down or give you food poisoning.
        And one week of twice a day milking was enough.
        And Daisy was a nice cow.

      • Prairies says:

        You can’t skin a pig or pluck a chicken the day it’s born. Takes months to raise food, be it animals or plants it all takes time to grow. So learn to code while growing your food, and you might survive. But if you think you can go to a random farm and just buy the last pig in the pen, you will be mistaken and starving.

        • Unamused says:

          You can’t skin a pig or pluck a chicken the day it’s born.

          Suckling pig needs two to four weeks. It’s what’s for dinner.

      • Lisa_Hooker says:

        Especially if the first hog you scald doesn’t seem right.

        So you just run the debugger, reload the editor and edit, then compile and run again with trace on.

        Just how many hogs do you figure you’re going to trash before you get it right? Infinite hogs?

        I often chuckle at coders comments. You do physical engineering and make a mistake it’s expensive, not so much software (unless you’re Boeing). I know, I do both.

      • polecat says:

        Good thing my firefox copy is close at hand, cuz one just never knows when those hands (+common sense..) are gonna need a workout !

    • 2banana says:

      Hey, there is an app for that.

      “Scald and scrape a hog?”

    • Lisa_Hooker says:

      “…butcher? Steaks come on plastic trays covered with clear wrap!”

      • polecat says:

        It would behoove people to store some foods (beans, rice, and the like) as prep for financial/economic disruptions, whenever they occur …
        I think we’re getting close to one now ..

        • Willy Winky says:

          You are such an optimist.

          As in you are assuming there will at some point be a recovery after the global economy implodes – and you will be able to replenish.

    • Brant Lee says:

      My little city in the Ozarks charts a 25.6% poverty rate in these ‘good times’. The line for free turkeys last Saturday stretched four city blocks, I really didn’t know it was that bad here.

  21. robt says:

    It’s especially concerning when Credit Card balances are showing 6.25% delinquency when all the debtor has to do is pay the usually relatively small minimum amount to stay current.
    No wonder credit card interest is 20% plus, and it’s unfortunate that there is no sliding scale of interest rates for responsible users based on their payment history. As is usual, the responsible users end up subsidizing the deadbeats.

    • Lisa_Hooker says:

      No Starbucks until the credit card balance is zero.

      • robt says:

        I obsessionally pay the day I get the statement, never paid interest ever. I know, I’m giving them free cash float for 3 weeks, and I don’t even buy Starbucks.

      • Frederick says:

        Whenever I’m in Warsaw I go to a small neighborhood coffee and pastry shop Better coffee at half the price and no crowds of teenagers and tourists waiting online for their 6 dollar Frappuccino’s

    • Javert Chip says:


      Wolf didn’t say credit card delinquency was 6.25%; he said SUB-PRIME delinquency was 6.25%.

      Sub prime-credit cards are about 33% of total credit cards.

      • Weary Patience says:

        If that’s the case then running the numbers 33%*6.25% results in about 2% of credit card users in default. Not so bad… convert it into a ratio form and it’s about 1 in 50. Seems kind of elevated that way? Maybe multiple cards per holder are in default and are counted as separate customers? Not familiar with how the data’s broken down in reporting.

  22. Iamafan says:

    ** A bit off topic but may be connected **

    Zerohedge just published an article about the recently concluded 2Y auction. Their headline – … Direct Bidders Surge To 6 Year High.

    I guess they finally saw the light.

    As I have been saying here (for a while) directs have taken ever a larger portion of marketable Treasury (competitive) auctions. Today they bought even MORE than the primary dealers, about 11.586 B vs. 9.198 B, respectively in 2Ys.

    But anyone watching the tape could have read the tea leaves.
    Last Nov. 7, they bought 30Y bonds almost the same as the dealers (each $3.9 B). They actually bought more 5Y and 10Y TIPs than the dealers last Oct and Nov auctions, respectively.

    I think the Treasury Auction market has changed. With these non-dealer, direct buyers getting more active; we will see a lot more “volatility” especially in liquidity since these buyers might not access to excess reserves directly (they might not be bank holding companies of primary dealers). These might just be the same “shadow” banking system that is lending in the sub-prime, high yield, junk and CLO markets. In other words, they may have been LENDERS on the repo in the past and today they are directly buying big at auctions and can be financing (BORROWERS) the same at repos.

    I think together with the everlasting and increasing Fed repo, we seeing a new chapter of the monetary system.

    • This is what State Street Fixed does. [They keep a diverse inventory and follow trends in the market rather than trying to predict.] Have a third party (proprietary) report, describes the risk across each class of various bond (funds) and how sensitive they are to rates. These guys jump in and out moving their inventory accordingly. No conspiracy theory here. Volume in the bond ETFs has ratcheted up, too much money chasing too few investments. The value/growth argument is over, there is enough money to own it all.

  23. 2banana says:

    You can always not play the game.

    Fyi. There are plenty of basic credit cards from credit unions that have pretty low rates with no annual fees.

    • Prairies says:

      If you have the credit score to acquire them. Wolf covered that in the “video”, the subprime blow out is people who can’t get those low interest loans. I have “good” credit and I can’t get a nice “low” interest card or cash back card. I can get a points card, not as amazing as they want it to sound when it is one step away from a high interest card with no perks.

  24. Rowen says:

    My cost of living, just for property/flood taxes and insurance, will go up $80/week in 2020.

    I can absorb that (single person), but I don’t know how many families can. Late stage capitalism, fueled by ZIRP-financed private equity, is quite fun.

    • Frederick says:

      My homeowners insurance doubled in 2014 even though I’d never filed a single claim in 35 years of homeownership Sold the house and got outta Dodge

  25. Ryan says:

    Where can one get the data to monitor the delinquency rates for these items?

    • Wolf Richter says:


      Here is the data set that includes auto loans. Download the spreadsheet and locate what you’re looking for in the table of contents, then go to the appropriate sheets:

      And here you get the data for the banks and delinquency rates for various loan categories:

      The easier way to monitor this, rather than digging through the data, is to come around here. This is stuff I write about often enough, sometimes also using data from Fitch on delinquencies for subprime auto-loan backed securities, and the like. And when I write about it, I also make charts. Never a dull moment in high-risk lending :-]

      • Julius Baer says:

        There is nothing there! The rates are very low overall!!? What is this?

        • Wolf Richter says:

          No one was talking about “overall.” This is about subprime. Go to the data I cited. It’s in the reports I linked above. You actually have to go look and find the data. And if you’re not able to do that, or don’t have the time to do that, fine with me.

        • Wolf Richter says:

          Here is chart, red for the 5,000 smaller banks that serve as stand-in for subprime, as explained in the podcast; and blue for all banks, which are dominated by the 100 largest banks:

  26. grepper says:

    wolf you forgot to mention the increasing social security contributions and benefit base as another thing robbing people of disposable income.

    that max amount is rising much faster than incomes.

    any wages gains that have happened are stripped out another 6.2% for most people.

    i personally am seeing my stagnant wages being eaten away by this. over the last 3 years the max amount has increase 10k which means $620 less in my pocket this coming year than last year.

    • Frederick says:

      Seems like it’s a slow grinding down of the standard of living for most That’s their plan afterall right? You have to be a fool to play along

      • grepper says:

        tell me your secret Frederick to not be on the treadmill. i’m stuck. too old and have three teen kids. as wolf mentioned kids take a lot of money!

        i didnt mention it but many getting hit with the max ssa contribution that own CA homes were also have SALT acting as another corrosive agent on disposable income

        spending more on health insurance and out of pocket health expenses too.

        being nickel and dimed to death…i definitely have less disposable income to spend then i did 4+ years ago.

        all this little stuff has outstripped what income gains i’ve had. i’m pretty sure that many many people are feeling it too.

  27. Julius Baer says:

    You can’t base what is happening on an anecdote about a 200K family where someone becomes ill. The delinquncy rates are so high it looks institutionalized. Maybe it’s retail personnel, wide spread fraud, the opioid epidemic. IDK. Old age kicking in. Americans always live above their means: see the trade deficit. It’s national and global. The US gets to have this trade deficit because of its military and market depth and its consumers. These wide spread defaults may well be some kind of policy or soke representation of that trade deficit.

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