During the Financial Crisis, consumers deleveraged by walking away from their debts. And now, with 20 million people still claiming unemployment insurance? (You can also download THE WOLF STREET REPORT wherever you get your podcasts).
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Another excellent report!
Too bad banks, as usual, are more important than people.
Indeed. It’s almost like the banks should not be allowed to have total control of the Fed.
They should be treated as public utilities and nationalized.
Amen. That would take care of 70% of America’s problems.
Restoration of Glass-Steagall would be sufficient
A bank is a legalized counterfeiting operation that creates money out of thin air when it issues loans. Your morality is twisted if you think banks should be nationalized rather than abolished.
Nothing wrong with just the National Bank of the USA, e.g., the US Treasury…….that I can see, anyway……being a financially challenged person……which is one of the reasons I read this site (the other being it’s nice to see intelligent educated comments, even if I don’t like many of them).
It is like letting the fox in the hen house, isn’t it? Seriously, the fact the Fed is willing to destroy the economy just to maintain the financial businesses supports you.
How does one snare a fedfox?
Isn’t a lot of this just to prevent Fractional Banking from…well….fracturing?
As I recall, it was those damned Dutch that started FB…..about 300 years ago or so?
Wonder what the original cash reserve (Tier 1 capital, such as it is) requirement was?
“Citizens United”. Louder & stronger than ever.
I’ve always just looked at that as currently existing private wealth’s attempt to control government and law……at least until they can just buy Congressional Seats, etc, outright, like in the City of London.
A separate but very related issue to the current weird plight of the debt slaves as outlined here by Wolf.
There’s something wrong with this guys research he says people used their pandemic money to pay down their debt but in another one he’s
says they used the money to by stuff at record levels which is it?? It can’t be both.
Paul Cat,
“…people used their pandemic money to pay down their debt but in another one he’s says they used the money to by stuff at record levels which is it??”
It’s both, as I said in this report and in all prior articles on the topic — they paid down their credit cards AND they bought record amounts of “goods”/”stuff.” But you forgot the biggie, “services.” As I said, consumers cut WAY back on “services,” which normally account for 70% of consumer spending; and overall spending is down from a year ago because of the reduced spending on services.
It’s an irony that most of the stimulus money was used to buy things.. and not on services. It means that China was the main benefactor of USA Stimulus monies.
That was Congress’s intent!
I used ours ( +some ) to buy US made silver eagles.
We manage more than 100 apartment units in SoCal.
Since the pandemic hit we had to hire a guy full time at the recycling garbage area as the amount of electronic packages and other cardboard boxes he has to process is insane.
We never had boxes and bottles of Don Perignon champagne and other expensive whiskies in the area , this year is beyond belief.
Rents have been paid on time, no issues whatsoever.
Sending money to people who haven’t lost income seems insane, I don’t know what our politicians are thinking.
All help should be targeted to people in need who have lost income.
I think when we look back at this period in the future, we will see it as the time of childish excess and overreaction.
Hahahaha!
The Plebs are developing a taste for “ Don Perignon Champagne hey! :)
What next Should they “ EAT CAKES NOW”?!! :)
Might need to hire another guy with more checks in the mail!
“services,” which normally account for 70% of consumer spending;”
An observation…and not really sure how it cuts here…housing and medical spending are a very big pct of “services” spending in the US (and go a surprisingly long way to explaining why “services” end up constituting such a high pct of all consumer spending).
Again, not really sure how this cuts in the Covid spend debate, but since a lot of people tend not to immediately think of housing/med care as traditional “services” I thought I should bring it up.
Cas127,
In terms of housing: rent and the interest portion of the mortgage payments are services. Mortgage principal payments are not included. And yes, healthcare expenses and insurance are also a big part. Travel is also a big part. As are many other services, such as subscriptions (cellphone, broadband, streaming, etc.), most forms of entertainment, movies, etc. Spending on services has plunged during the Pandemic, and is still far from having fully recovered. From my article on consumer spending through November (released Dec 23):
https://wolfstreet.com/2020/12/23/the-state-of-the-american-consumer-second-wave-hits-spending/
By contrast, here are durable goods:
I guess they cut back on services because they had no choice: the services: indoor restaurants, bars, nail salons, gyms and now ski hills etc. were closed.
If the vaccine(s) work there is big hope for the sector because I think consumers would LUV to spend on these if allowed. On the other hand, a large part of ‘work from home’ is probably permanent for IT workers.
RE: ski resorts. A bunch of Brits just did a midnight flit from a swank Swiss one, after being told to stay in their rooms when not skiing.
Wolf, I know the stimulus checks are not taxable, but will they put you into the next tax bracket, if you are already close to it?
DawnsEarlyLight,
As always, CYA: Ask a competent tax accountant. But here is my own off-the-cuff ignorant guess without having seen the regulations: if stimulus checks are not counted as taxable income, then they should not push you into the next tax bracket since that honor is based on taxable income.
Whenever I hear people talk about tax brackets I wonder if they understand how marginal tax rates / “tax brackets” work. You understand that even if it pushes you into the next tax bracket, only those few dollars over the tax bracket line are taxed at that marginal tax rate, right? Not your whole income. But then I think, if you did, you wouldn’t be concerned about it…
Yes, now that you mention it!? You don’t have to be a mook!
Wolf, it appears the stimulus checks are a form of an advanced refundable tax credit. Strange, since it’s based on 2019 income. Just wondering how it would affect several of my other tax credit positions.
Thanks on the refresher Mookie, but no, I am not ‘concerned’ tax bracket computation, but on stated income.
If you understood Medicare IRMAA, I think you would be concerned, Mook.
(Also, child tax credit, education credits, saver’s credit, etc.)
I have no problem with it being “both”. Instead of those having no kitchen (but a luckily roof over them, like a rented whatever) dining out (service), they bought small fridges and microwaves, Instead of traveling and getting hotel rooms (services) they bought tires to ensure getting to work, looking for it, or the grocery.
Seems like an intelligent bottom level debt slave move, to me.
The comments generated from your contribution’s of the mechanizations of the economy sometimes astounds me..
Many times I wonder if they read , or in the case of your podcast even listen carefully!
Wolf , thanks for your podcasts , I listen when you provide an episode.
I’ve missed hearing them due to absence for a few weeks until the Dec. 27 episode..
Thanks appreciate you much
They buying goods from china. Empty containers going back to china
Americans have no choice: e.g., a major, US retailer imports vast amounts of products from China, drove US businesses under with its low prices by getting products produced by quasi-slave labor in subsidized, Chinese, CCP factories, and made huge profits while it referred its low-paid employees to get food stamps, reportedly.
The ultra rich could completely evade paying taxes through their US foreign income tax laws, which exempted the billionaires’ foreign income from investments in China and other countries from US taxation until brought to the US. As a result, they just did not bring back the income to the US and just put it into foreign holding companies that in turn, sometimes, invested in the USA.
Read about Apple. See Fortune Magazine: “Apple Avoided Paying $40 billion in taxes now ….” We should create a windfall profits tax to re-capture the unpaid taxes that similar companies have avoided paying while parasitically having their US workers get food stamps, etc.
Reportedly, the USA has $211 trillion in liabilities and faces a demographic cliff from the baby boomers’ upcoming retirement. Given its current needs, I see no alternative to making the billionaires and millionaires finally pay a fair share of taxes, just as secretaries, waitresses, and others are forced to pay.
Create an IRS tax task force dedicated to auditing anyone with more than $20 million in assets. That alone should create huge tax receipts. In Los Angeles, at least, tax cheating by the rich is rife.
K, the government cannot sustain the military expenditures of 700 plus billion A YEAR. We cannot continue and when you read what was in the latest Covid bill, our money spent on things not even related to the country or spent on foolishness. I’m not saying Corporate should get so many breaks, but it starts with the government. Term limits or everyone is doomed.
That’s precisely the current plans A, B and C ! For the Democrats that are in power now!
But believe YOU Me, that plan is NOT THE PANACEA the us should be seeking .
It’s being tried before in the USSR and abandoned in CHI NA!
Re Apple…it is helpful to focus on the products that contribute the most to the US’ horrible trade imbalance.
And for China…that is smartphones (we send them low value soybeans, they send us overpriced iPhones). It shouldn’t be a surprise which country ends up having a healthier, more advanced economy.
But one question is why Apple continues to dominate in smartphones (costing 5 to 10 times more than Android options) in a way that Apple computers had to forget about in the late 80’s.
For some hard to ascertain reason, Americans seem committed to really overspending on smartphones…making the China trade imbalance that much worse.
China would still make the Android phones (the US has become pathetically/dangerously weak in tech manufacturing…all manufacturing) but the size of the trade imbalance would shrink noticeably.
“Americans have no choice”
SURE they do. Low cost necessities are one thing, but watch the YouTube videos gushing over the latest China manufactured smart phones, laptops, HDTVs, etc. that the lemmings continue to buy to replace working devices, their thanks to China for COVID-19.
Winston,
I’m not so much opposed to *improved* gadgets…but it is really, really hard to see how much dramatically improved iPhone functionality occurs from yr to yr…at least to a degree justifying annual after tax expenditures of $400 to $1000…when there are $50 to $100 alternatives avl.
From a broader perspective, I have to wonder if ZIRP doesn’t (intentionally) empower mostly pointless consumer expenditures by a certain subsegment of the population…who are basically reactive spenders…whose intrinsic risk is underwritten by ZIRP and laid off onto ZIRP starved savers via ABS (bundles of consumer loans aggregated into securities).
Of course, the truly fatal part comes from the benefit of this artificially coked up spending behavior accruing mostly to foreign product producers.
But NOOOO!! It’s the peons in ‘non-PMC’ LowerMokestan who’ll get shafted, by having to pay taxes on those ‘hideous, socialist-inducing relief chex’!
My wish is for Mitch, Nancy, and their enablers to wear coal filled stocking by year’s end – Blazing Hot Ones!
Cas127, do you really need basic economics to be explained to you? Or can you figure out on your own what the “value” of an iPhone is? Hint: it’s what the people paying for it think it is, not what you think they should think it is.
Cas127,
Samsung is very popular as well and is the main android phone maker for America, their phones (the flagships) actually cost more than iPhones, right now. Also most people buying iPhones are keeping them for at least 2 years, but, often much longer than that. Cheap android phones are junk. The $400 iphone SE could easily last a couple of times longer than a cheap android one (not Samsung), the cost difference wouldn’t be worth it to most Americans.
Samsung has stopped producing their phones in China entirely, and Apple plans reduce its size in China in near future. It’s also important to note the main assembler of apple products in China, as well as the main assembler for many other major US tech companies is Foxconn, which is a Taiwanese, Not Chinese, company. Because, of China’s constant threaats to invadde Taiwan, Foxconn is also planning to move many other factories out of China. While, China is the final assembler for many tech Items, most high value parts and most parts in general are made in other countries, before being shipped to China for final assembly. It’s also important to note that China must import the raw goods and many components for the things it makes. The actual net exports of China are approx. $425 billion compared to Germany’s $300 billion, a far smaller and less populated country. Alot of people seem to think China is single-handedly making most things, but, it’s mainly the final assembler for many things (and on the decline). Alot of US manufacturing includes things such as almost everything that goes into houses and most infrastructure, but, that stuff doesn’t usually have “made in blank” stickers.
It’s also important to note that, phones are replacing many other electronic devices and many other goods as well, so they could in the end help reduce trade imbalances and I expect smartphone prices to crash in the near future (5 to 10 years), in the same way TV’s have.
Lastly, remember all the numbers from the CCP are BullSh.
The construction of houses is what, I was referring to.
Dear JK:
Maybe, we can probably find ways to save on the defense budget. Certainly, since I have not read the thousands of pages, I am sure that there is a lot of fat in the bailout and defense bills: e.g., I am not sure why we are giving ultra-low interest rate loans or what amount to grants to wealthy companies, which have paid out billions in share repurchases, etc., regardless of the pandemic without requiring that US taxpayers get some share ownership to profit from their later recoveries.
However, I suspect that many foreigners are buying our treasuries out of fear of China. I suspect that most other Asian countries’ populations do not want to “volunteer” to be the next group that the Chinese communists will kill and harvest organs from for profit, so they support the US dollar and USA.
Losing the South China Sea (“SCS”) would mean that Japan, Taiwan, and South Korea could be blackmailed by CCP’s threats to stop all of their shipping if they could complete their theft and control of that international shipping route, the SCS. Thus, I regard efforts to drastically cut the defense budget now like I regard those who wanted to balance the budget by cancelling defense spending in 1939.
China is not invincible. It has its own demographic cliff and its utterly corrupt, criminal dictatorship lives beneath Damocles’s sword. We should work to cause them to lose power using against them their own currently-used, short-of-war tactics from Sun Tsu’s “Art of War.” Form an Asian NATO to share the military burden and thereby limit our defense spending.
Dear Winston and Cas127,
The foreign tax laws in the USA for decades excluded foreign income of US persons from US taxation, so they motivated US persons to invest in China, etc., and drove our jobs, industries, and the US’s key economic base to China. We can eliminate that incentive and impose taxes or fees, e.g., a security fee to have each and every shipping container coming from China opened and closely inspected for contraband or spies, that would discourage purchases from China.
We should realize that we can still select who will be the next, rising world powers. I do not see India or other Southeast Asian countries becoming the next imitators of Hitler’s Germany, so I propose that we select them and other countries, e.g., in South America to support with tax benefits and incentives. Encourage US persons to invest in countries other than the CCP-oppressed, mainland China.
There is nothing that China has fundamentally that ties us to it, except that it is a ruthless dictatorship that has no concern for its workers and treats them like quasi-slaves, without unions or significant protections, does not care about the environment, does not care about its citizens obeying any foreign laws or keeping any promises and has conducted a covert war against the USA and its businesses for decades. Read CNN about how the CCP controlled “Chinese media calls for ‘people’s war’ as US trade war heats up” against the USA.
US citizens will keep buying their junk. However, the junk does not HAVE to be made in mainland China, which has rising labor costs despite its quasi-slavery type laws anyway.
Audit anyone with $3 million or more.Even if one lives in overpriced CA,that leaves about two million leeway.
NEWSFLASH!
The comment about the i-phone being a huge part of the trade deficit with China is completely wrong. Apple is not a Chinese company. It is an American company using China for one thing: cheap assembly labor.
Here are the numbers. They are from 2016 for the I -phone 7 but will be little changed.
‘Factory-cost estimate of $237.45 from IHS Markit at the time the iPhone 7 was released in late 2016, we calculate that all that’s earned in China is about $8.46, or 3.6 percent of the total. That includes a battery supplied by a Chinese company and the labor used for assembly.
The other $228.99 (some for components) goes elsewhere. The U.S. and Japan each take a roughly $68 cut, Taiwan gets about $48, and a little under $17 goes to South Korea. And we estimate that about $283 of gross profit from the retail price – about $649 for a 32GB model when the phone debuted – goes straight to Apple’s coffers.’ From CBS
China doesn’t even get the profit from supplying the labor. Foxconn is the labor contractor. The I-phone is a very bad candidate for Navarro’s ‘China Bad’ scenario.
If the US gov wants some of the I-phone gravy, the answer is to go after Apple, not China. That’s what the EU is doing.
The IRS collection task force that did exist (and made around 10x their salary in tax collections, I believe) was cut back, if not abolished.
To “save” on the usual wasteful government spending….ostensibly……:-]
Well as Wolf said services took a hit, but at the same time I think some people simply replaced one type of debt with another i.e. credit card debt replaced with fintech debt.
The credit rating agencies are aware of the later, but not sure if anyone’s tracking the former.
Oops, I meant, the credit rating agencies are aware of the later, but not sure if anyone knows how much personal loan is being used to replace credit card debt.
MonkeyBusiness,
The proper name of the category of debt here that I called “credit card debt” is “revolving debt,” the vast majority of which is credit card debt. It also includes personal loans and similar revolving debts, but the amounts are not huge, compared to credit card debt.
BTW, HELOCs are not part of revolving debt; they’re part of mortgage debt because you’re getting a second mortgage.
@ Wolf
If a $100,000 HELOC is recorded against a house but it only has $9,000 drawn as credit, what amount is counted as debt?
The $9,000.
It can be many things. Some actually invested their pandemic money.
It may seem unbelievable but there are people who don’t spend more than they earn, live within their means and save, in case things get tough due to unforeseen events, such as disability, sickness or, perhaps, economic disaster. That’s when cash is king and stocks are cheap. So, they bought stuff they may not have needed, they payed-down debt and they bought cheap stocks. :-)
Haven’t seen any cheap stocks since 2008.
Easy to do with reliable,fat salary and good benefits-more rarified position these days! :-)
Paul, if I got $1200 in stimulus, can’t I spend $700 on a big TV and $500 to pay down debt?
You should find some way of making your point that isn’t quite this obnoxious.
Rich people enjoy giving advice to poorer people on how to spend their money.
I’m neither rich nor poor, and I look down on people who spend $700 on a new TV when they don’t have a pot to pee in.
So, if I’m a techy in the six figure range, kept my job during Covid while remoting from home, no more gas expense, no more lunching at restaurants, and now with all that travel time to work completely mine, I wonder where I’d put my $1200 of helicopter money (which is the real definition of it) ? I’m sure Wolf would have recommended putting it on Tesla, but as a rebel going against the trend, I went with Oil. Sorry =)
On a side note, my friend who manages a few buildings in NYC in central Manhattan just told me that one of his buildings with 90 units has now 42+ units vacant.
Nick,
“…one of his buildings with 90 units has now 42+ units vacant”
Ouch!!!
I fit your description to a ‘t’ and I’m putting mine into an attempt at earlier retirement via stock market gambling.
BTW no one that you describe, including me, gets $1,200 helicopter money, my comment was in reference to the general savings from the expense categories you mentioned.
Wolf “Ouch” was my reaction too.
From what he told me, the landlord inherited the building from his father, and very likely is payed for and as a result, he’s refusing to budge on dropping rents. My friend also told me that for the first time in his 15 years of managing that property, leaving tenants are submitting complaints about the conditions in and in-front of the building as a reason for them leaving.
But enough of NYC, as President Ford once said, “New York might be called the big apple, but even apples eventually rot”
Another anecdotal evidence from an coworker here in LA. The building he was thinking of moving in, a few years ago in downtown LA, has now new offerings, Its a new property with all the amenities, underground parking, indoor gym, it was very covided.
The price tag, used to be $3700 /monthly.
The new offering is $2800/monthly with the first 2 months free.
I’m sure you guys can calculated the prorated cost.
So that stubborn NYC Landlord might not have a choice soon.
@Zantetsu, I was fortunate to have worked oversees the year before covid, and qualified for it, I must have a decent tax guy =)
So…
The Fed lowers rates to near zero. Which makes it hard for the banks to make any profit.
But…Credit card rates have not moved from 25%.
Saving the banks with their high and fat profit margins.
But the pandemic stimulus checks and extra unemployment insurance checks went right to paying off credit card bills (not to mention the non payment of rent funds).
Crushing the banks.
The Fed looks up from the table stunned…
FHA mortgages are at 20% delinquencies.
But still consumers pay off credit cards!
The Fed needs the debt boom to keep going…damn these American consumers!!!!
Weirdest economy ever.
My solution:
Don’t play the game.
In spite of 20% of FHA loans being delinquent, Nov. new home sales increased 20% YOY.
Credit card debt, subprime auto loans, pay day loans and pawn shop loans are usury. It is good to pay down such debt.
Without a new stimulus deal, what is going to happen?
Take a front row seat to see the amazing spectacle of delinquent mortgages coming out of CARES act forbearance after one year limit.
We can place bets now on what authorities do next to mitigate an avalanche of foreclosures.
My bet is that there will be another mortgage relief program, though maybe called something else than ‘forbearance’– but anything to ‘extend and pretend’.
Perhaps a lot of eye-opening ‘creative’ loan modifications for guv-backed GSE-type mortgages will appear.
Or, much to our ‘surprise’, Congress may grant yet another 180-day extension to mortgages at end of original forbearance program.
Last but not least, newly printed fairy dust money may materialize to shower many distressed mortgage holders with ‘mortgage relief subsidies’ to keep the game going longer.
The desperation is starting to feel palpable.
Yes it is and what cannot go on forever, Will NOT
I’m curious as to what happens to pension fund distributions when CDO/CMO holders don’t get the pass-through from the loan servicers.
There will certainly have to be some creative new measures dreamed up. States like Oregon have extended eviction prevention until July 2021. Meaning all that lack of rent payment is going to keep up the chain from land lords to banks to the fed.
I think I see helicopters on the horizon.
How appropriate it is– that “normal” folks are erasing their debt with money from the Fed’s magic money machine. Seems that it’s the same thing the Fed is trying to do when they use their magic money to buy questionable stuff in the corporate and treasury bond market.
I remember a magazine article from 1929: “Everyone ought to be rich!” The Fed should have a policy “Everyone ought to be free from debt.”
They seem to have the technology to make debt disappear at zero cost. That would up the consumption–a lot!
But I’m getting a little confused about what the term “money” now is supposed to mean.
Old: Debt is slavery. Money buys freedom.
Current: Debt is money. Money is debt.
Future: Slavery is freedom. Freedom is slavery.
-The Woke
The Federal Reserve and DC critters are masters of DoubleSpeak (bow to Orwell’s dystopean novel “1984”).
Whatever pretentious pronouncements are promulgated from Eccles building, I usually take the opposite meaning to be truth.
2banana!
“My solution:
Don’t play the game.”!!!!
Funny that you said that, but the reality was a fair CHUNK of the American voters swallowed the proverbial and Voted ,
yeah if you believe the statistics your solution amounts to “ NOTHING “!
as you’ve participated in the election of the tried, tested and FAILED SOLUTIONS OF THE GOP and THE OTHER MONKEYS!
So, too late now, you’ve had your chance to redeem the us and you’ve collectively FAILED, and will subsequently reap the consequences and by extension as WOLF alluded to in his marvelous report the rest of the world “ ECONOMICALLY SPEAKING “.
There is only one party, a monster with two heads. No matter who you vote for, you get the same thing–more war and more debt. The voting booth has no more power than the steering wheel on a child’s car seat. First, you see the delusion for what it is. Second, you don’t participate in it.
Yup — it’s team Pepsi or Team Coke: either way, it’s neoliberal cola in the bottle.
The USA is a turkey with two right wings.
Very well said, eg. Today’s Dems are way to the right of Eisenhower. Our monied oligarchy “party” has been working on that ever since FDR pissed them all off during the last depression.
But hey, he kinda did them a favor at the time, because the slaves back then were so pissed they were joining up the with the dreaded real red party…..a far worse situation if you are a rich capitalist.
Wolf what about student loan debt? You didn’t mention that.
That’s in a category of its own, for a number of reasons, including that consumers cannot walk away from it on their own, but government can and does let them walk away under numerous conditions that have been in the rule book for years.
The ideal situation for Americans facing a non responsive and even destructive series of government policies would be to get as much money as they think they are entitled to, refunds to be paid sometime in the future, if book keeping mistakes on their part.
Also to build and use up as much credit as possible to buy useful things like non perishable food, materials, soap, tradable goods, things that will be more expensive and or unobtainable in the near and distant future.
The bill on the maxed out cards? It will be paid sometime in the future by President Harris maybe?
If not, well bankruptcy and then new credit cards in a few years.
You lead the way!!!
I’ll be sleeping in my bitcoin and eating my gold.
Please, George, go back to ZH. You’re getting a little ahead of yourself….
Wasn’t it Bernanke who finally gave up the ghost and admitted he thought it better that one “die in debt than be deprived of nice things” or something to that effect?
Many have figured this out and are implementing!
Let it burn, why should American consumers be responsible for floating up the profits of banks and corporations.
Let the Chinese consumer be responsive. ?
1) The $600 stimulus check will not disrupt the greedy banks.
2) Mayors moved to remove loud & dominant food trucks from every choke points in NYC and other major cities, under the pandemic cause.
3) From Jan 21 2021 governors will force law and order, crush violent
mob, arrest protesters who take pictures of FBI agents and those
who dare to raise their hands on the police.
4) Will the governors bend the will of the mob, or vice versa. Will the mob resort to extreme actions, grow in strength, due to the toxic mentioned above, in Wolfstreet report…
What do you mean by “loud & dominant” with respect to a food truck? Are some “quiet & submissive”? Are they playing loud music?
In my small town of 50k I haven’t seen a change, nor have I heard of their removal elsewhere, so I’m wondering what’s up.
Loud and dominant trucks – trucks that dress up in colorful flamboyant clothes and are dominant in bed…or ubiquitous Amazon delivery vans aggressively parked on sidewalk on busy lanes with unauthorized markings and drivers playing loud music?
I saw some loud and dominant trucks in the country of Panama….they’re called the “diablos rojos” (red devils). If you’ve never seen one, please google. They are awesome!
I was in Panama in the early 50’s when the old man was in the Army. They had small busses called “Chiva Chivas”…..also painted up wild and were driven even wilder….even at that very young age I remember them.
The boM is here to help, if you don’t want to help get out of the way.
Queens:according to Police Tribune.com,a woman was home with her 17 year old when they were unexpectedly raised by several cops.Why?They had received a tip that the woman had a bunch of guns.Stuff confiscated,woman arrested/jailed,charged with negligence or endangering minor.Problem?Guns were airpistols,models,toys,mockups,and 1 half disassembled gun with No trigger,handle,or innerparts.She had a biz providing these Props to actors,video co.s,etc.Really?Cops cant tell yhe difference between illegally posessed,functioning guns and props?They put her in jail!Apparently n.y. Shootings are up like 90% and murders up 40% according to this site and gun applications are up hundreds of %,yet they are not provessing and approving gun permits.Obama signed a law allowing several fed agencies the ability to carry guns-unusual agencies like irs,h.h.s.,etc.Seemingly no logical reason they should be arming up while noncrazy citizensxan not get a gun permitted.Doesnt bode well!
Paying off credit card debt can be viewed as a defensive move in risky times. Not only do you decrease the financial hemorrhaging caused by the usurious interest rates, you have cleared the deck and have re-established the maximum allowed credit which you lmay likely need to access in the uncertain future.
I have noticed several on line merchants that offer 4 interest free payments from companies such as Afterpay, Affirm and Klarna at the checkout. They require only a cursory credit check and appear to be aimed at people who may have trouble getting credit cards or don’t want a credit card. So maybe these new “point-of sale” lending companies are taking some of the business away from bank card companies. Plus check out “point-of sale” lending. It is an interesting concept. Just a thought.
Steve,
Ever since there was a “sale,” there was “point of sale lending,” which went under different names over time.
Y’all cut up those credit cards, Capeesh?
I recently got a store credit card from Home Depot. The 1st store credit card in my lifetime. It served me well during the pandemic when there was nothing constructive to do except lawn renovation, tree planting, and working on a wildlife refuge in my backyard. Quick contact free checkout, discounts, and no interest if you pay it off every month which I did. Not a fan of credit cards but this one served me well.
Early in my CC life, I was a horrible user of credit cards. I wasted a lot of money in paying interest and late fees. For me, it was a long learning curve. I finally came around, and realized paying off those damn CCs ‘one and done’ was the ONLY way to use them. The past 30 years has proven that system works, only use the CC if you can immediately pay it off. CCs are not for the financially distressed, but unfortunately, that is what we have been led to believe.
You cut up your credit cards, your ability to borrow goes down.
Your ability to borrow goes down, so does your credit score.
Your credit score goes down, your cost to borrow goes up.
They have you where they want you!
2009 swallered my house, car and credit cards and tossed me into a class of citizens who:
– are no way renting anything
– get a nope to staying in any debtor’s only hotel
– often hear “we don’t accept prepaid cards (you idiot).”
What’s in your wallet? matters way more than what’s in your heart. It’s sad and getting sadder.
People cut up their credit cards and pay off their debt to avoid debt. Somebody who does not need to borrow money does not give a crap about credit score.
Really. I don’t have to use credit cards, but I do, to increase my credit rating, and take advantage of credit card ‘deals’. Debt is good, if you know how to use it.
To be blunt, a person using CC’s needs to have sufficient funds at all times, to cover their debts and expenses. I know, that’s a perfect world, and not everyone lives in that world. So, cut up those cards if you don’t live in that perfect world, because your credit score is a big part of your social score.
re: “Somebody who does not need to borrow money does not give a crap about credit score.”
Not entirely true; your credit score may, in part, determine how much you pay for car (or other) insurance, and whether you get that ‘dream job’ or are able to rent a home. There may be other instances; these came off the top of my head.
Cutting up your credit cards will not give you bad credit. This is a red herring. You will still have enough credit to rent, buy insurance, buy a house at a good rate, or get hired. You will just not be a Certified Debt Slave.
I did not have ANY cards for 10 years–I used a debit card. Once the car rental agencies stopped accepting these, I had to get a CC to travel. I always got cheap car insurance. We saved 8 years and bought a home cash, so I don’t care about mortgages.
No one said close those accounts!
I hope people will wake up to the fact that the Federal Reserve is not your friend and indeed is very hazardous to your financial health. We need to get behind a new movement to end the fed!
The Fed is the enemy of the people. Bernanke was the worst Fed Chief since Miller (golf cart manager) in the Carter area. He literally wrecked the entire financial bedrock of which this country was founded. I would say he should go back to waiting on tables, which was his original occupation, but that would be an insult to all the hard working people who do that job and serve the public.
I liken the Fed’s actions since 2008 to driving a car with the sole purpose of going as many miles as possible.
So when you’re on the highway, and the engine starts overheating, instead of slowing down and going to a repair shop to get the problem fixed, you just hit the gas and hope for the best. You might end up making it another 20-30 miles, but you’ll end up destroying your engine.
That’s basically what the Fed has done. To prevent recessions and some short term pain (having to get the car repaired and stay in a hotel room overnight), it’s ensured that the entire economy and financialsystem will collapse.
Thanks for saying it. Now…whose fault is it?
A lot of it is due to the US voter, including a lot of the people railing against the ‘Eccles Building’ ( a David Stockman term, a main Fed hater)
The US voter doesn’t like recessions ( it’s the economy stupid) and US politicians don’t like whatever the voter doesn’t like.
The Fed is not independent, unlike the German Bundesbank that is. Trump’s endless ranting at the Fed for ‘more’ is typical. But if anyone should know where the blame lies it’s Stockman. As Reagan’s OMB director he oversaw the doubling of the US debt in 4 years. The total debt after 4 years was 2 trillion, having started at one trillion.
But Reagan, whose staff according to Stockman, thought was ‘dumb’ (Stockman’s word) told Stockman ‘the problem isn’t government spending, its deficit financing!’
Reagan ran on tax cuts but didn’t want the to cut spending to pay for them. So the one trillion debt since 1776 doubled in 4 years.
This was the beginning of the new political mantra: ‘deficits don’t matter’.
Stockman tells all in his book ‘The Triumph of Politics’.
As for the current Pres, he was in discussion with then Economic Adviser Gary Cohn about budget problems when the Pres said ‘just print the money’
Don’t worry people. The stimulus has been signed. The party continues. Market opens with a bang tomorrow.
“They sent me no cash for Christmas, They sent me no cash for Christmas!, They sent me no cash for Christmas!!, So screw their good cheer!!!” With a bit of make-up, Franklin really does look kind of like Bozo the Clown.
..and they thought LSD was a good trip. ..;)
That just means a lot of companies closed or a lot of Americans become lazy
So credit cards are scams? Good thing I never had one, even if I once got one sent my mail, I never used it and cut it into little pieces.
They’re not scams, they are useful tools providing a useful service if you use them responsibly.
But their business is based on people not being responsible.
The credit card business does not rely on irresponsible people, they spell out everything clearly when you apply and receive your credit card.
If the argument is that people don’t read the fine print, perhaps they should. It’s real money that is being transacted here, not the ephemeral data that is more difficult to quantify. Or at the very least, they need to know how credit cards work. The lack of financial education doesn’t absolve one from responsibility.
So is a double bacon cheeseburger, fries and a shake.
lol @ Lisa_Hooker ??
I use them only for convenience and bill consolidation purposes.
Pay them off every month. Don’t pay any interest.
Credit card companies pay me quite of bit of money to use credit cards,
It’s a scam for people who can’t pay it fully every month ( extremely high interest rate ) but for people who can pay it fully, its a good convenience and it pays back. CC companies hate people like me.
Can’t help it but play this game of using cc.
You’re likely one of those people who doesn’t eat the whole box of chocolates or polish off the entire case of beer in one sitting.
Could be a birth defect but it ain’t normal and I’m pretty sure you feel it.
I don’t think you people really know the definition of the word “scam”. By your definition, any product that doesn’t meet your personal valuation is a “scam” if someone else applies a different valuation to that product. By this logic, Cas127 thinks iPhones are scams. It gets tiring trying to suss out reasonable and interesting posts here when people just saying meaningless things all the time.
I ask you: if I go to a movie, and didn’t like the movie, was that a “scam”? If I order a steak at a restaurant and it’s medium instead of medium rare, was I “scammed”? If I pay to go to an amusement park then there’s a tornado and the park is shut down because on of the clauses listed on my ticket says that the park will close in the event of dangerous weather, was I “scammed”? What if I didn’t even read the ticket? Surely I got scammed if I didn’t read the ticket … right?
There are many, many people who through bad planning and/or desperation will pay high credit card interest rates. They *must* prefer it to the alternative, which is to not have the stuff they got to buy on credit … OR ELSE THEY WOULD NOT HAVE USED THE CARD.
I mostly agree with you, but if the credit card companies act in a predatory manager i’d say its a scam. Was home lending during the housing bubble predatory?
Credit card companies do not act in a predatory manner in my opinion. Their terms are very clearly laid out. No one who is not being wilfully ignorant doesn’t know going in that carrying a credit card balance has a high interest rate.
Furthermore, the goods purchased with credit cards can typically be lost to repossession or forced sale to cover debts or whatever without ruining a person’s life like losing a home and the huge downpayment that went along with it does to someone who got tricked by home lending practices in the housing crash.
Credit cards and other kinds of credit are like a band-saw…very useful and powerful tool if used properly, but it’ll take you hand off pronto if you don’t know what you’re doing.
It’s always good to have options. Being trapped is a bad feeling. It’s not a bad plan to pay off all debt except mortgage and get a big cushion of cash saved up for personal or national emergency. Things in US are sold in dollars as well as all taxes so that is what you have to have when things go bad. Longer term stocks and gold are good, but cash reserves are for when things go bad.
Yes, Old School. And I would add to that some cash squirreled away at home that is kept replenished. Good idea to carry some wallet cash as well. Twice this winter I have been in a checkout line and had to use cash because “our machines are down”. Tech glitches happen.
A better idea is to pay off your mortgage too, or start doing it as soon as possible. Making an extra principle payment every month is a good way to start. The banks hate it when you do that. The new tax law took much of the advantage away of having a big mortgage.
Yes,
I paid off my house by age 40. My kids (when they grew up) said, “Now I know why we always drove one old used car”. It’s been 25 years since we made a mortgage payment and it’s awesome knowing that no one can ever kick us out. Could buy whatever, now, but still drive old cars. Go figure. Just can’t waste the money on a depreciating asset, something that loses its shine a few weeks off the lot.
What you describe isn’t really possible any more, at least not in most “desirable” parts of the USA.
It would be nearly impossible to get a mortgage before something around 30 years of age, and would require two people making good money to engage in such a mortgage.
Then you’d only have 10 years to pay off your mortgage. This is simply impossible with today’s prices. You might be able to do it in 20 if you had no investment of any kind other than your mortgage.
At that point, you’re essentially investing all of your money in one place: your mortgage. It’s never smart to invest in such a non-diversified way.
I mean seriously, if all it took to be able to pay off your home in 10 or 15 years was just a willingness to “scrimp and save” … wow that would am amazing. Pure fantasy though. You can’t scrimp and save your way to paying of a million+ dollar mortgage in 15 years.
I concur with Zantetsu. At the beginning of the debt cycle what paulo describes is possible, but as debt inflates everything requiring more debt and wages do not inflate it becomes a trap.
” it’s awesome knowing that no one can ever kick us out. ”
Sure they can. Never forget that you are still renting your home from the local government. If you don’t believe me, try not paying your property taxes and see what happens.
This is still possible in much of the country. The comments in response about how this isn’t possible in many “desirable” areas are also true but no one is forcing anyone to live in coastal CA or the Boston to DC corridor. Way too many people buy way too much house even in those areas.
“and it’s awesome knowing that no one can ever kick us out.”
Paulo,
Hmmm…can you say “property taxes”?
Old School,
I believe you are correct, but a big argument going on in my circle in this regard is the link between inflation and savings.
A lot of my friends who have a substantial amount of savings, single, late 30s with over $500k in the bank + whatever 401k they’ve accumulated.
Their big fear now is a devaluation of the currency. When they see Tesla stock price and Bitcoin today at 27k.
I’m a little curious what you guys think constructively about this. Please no ZH conspiracy, or gold recommendations, or any Russia-US-China new world order we should submit to.
Because high unemployment, massive amounts of commercial real estate out for lease, government handouts feel all like a very desperate attempt at staving deflation to me personally.
Diversify, really our only option, unless you can tell the future. I agree with Frederick and the gang, gold is a good option, but the entry point? Who knows.
Was reviewing Yardeni’s research. Since 2009 crash revenue per share has fallen below long term trend line of 7% yet market is on a rocket ship as the deficit spending and Zirp and QE keeps flowing into assets instead of real economy and real sales.
Wolf
Do you have any data on the default rate on VA insured loans?
In Q3, the VA mortgage delinquency rate rose to 8.2%, doubling year-over-year, and the highest level since 2009, according to the MBA. I don’t have more current data.
This is good information. We’ll put it in our appraisal reports. Starting to look like 2005/2006 all over again.
I included the affordability index rate in a report one time. They asked never to do that again. That was in 2005.
Here is what the stimulus money have been spent on, based on various articles, including this site:
To buy durable goods (good for China) – probably 40 to 50% of all money spent, can be judged by the swelling China’s trade surplus that is now close to 40 bln a month
To pay down revolving and other debt – not much probably around 10%
Make down payments on cars (which are durable goods). This creates new debt, but good for Mexico and Europe. Not much, probably 5%, but this inflated prices on used cars.
To pay rent, not much, probably under 5%.
To invest (hard to charge, but probably up to 10%) and save.
But saving is a relative thing. A relative of my wife stashed Trump’s $1200 initially, but apparently spent them later on attorney dealing with her speeding charge and than again to repair her SUV, damaged in road accident. I would guess that many people would spend like that on things that pop up. I would expect a lot of hospital bills to be paid too.
Regardless of where people spent, they spent and most likely will spent on consumption (instead of borrowing). One way or another, this private debt was replaced by public debt. So, overall, there is probably more debt out there than before, especially given that corporation have been borrowing heavily as well.
So when the pandemic ends, you will find consumers who are actually worse off (stimulus money spent, but incomes not recovered) and looking for new hand-outs, corporations, most of which (except few) are much worse off and looking for new hand-outs, the government, which has much worse off and cannot afford new hand-outs.
I’m worried about the government and it’s need for more take-outs.
Elephant in living room in all our discussions about how Nanny Guv will now have to bail out everyone … is who paradoxically will bail out Guv (which is dead broke and insolvent)?
Here’s the biggest story for 2021 — The year of global vaccine shortages and denial of the ongoing pandemic:
4.4 million doses globally have already been administered, including 1.94 million doses in USA.
COVID-19 that has led to confirmed cases of more than 1 percent of the world’s 7.8 billion population.
The false positive rate of the PCR tests is 2% and 90% of those tested show some virus, amplified by overcycling, which most likely they will fight off.
The vaccines squash symptoms. There has been NO TESTING to show that they stop one from being contagious.
Not to mention this from the CDC’s website
“For 6% of the deaths, COVID-19 was the only cause mentioned. For deaths with conditions or causes in addition to COVID-19, on average, there were 2.9 additional conditions or causes per death.”
Mr. House,
In Vietnam, 55,000 or so Americans died from all kinds of causes of death, such as organ failure due to perforation from foreign objects, or they died from damage to their brain, or they died from infections, and from bleeding to death, and from a million other causes of death. And some just disappeared and their deaths were never verified. Almost no one “died of Viet Cong.” Get it???
The corona itself doesn’t kill you. The corona causes your organs to fail, and it causes other conditions in your body of which you might die.
It’s like dying in a car accident. You didn’t die because your car got hit by another car. You died because you bled to death or because of heart failure or brain failure, or whatever. That’s how life is.
I’m just so sick and tired of reading this Covid-is-no-big-deal garbage after 340,000 Americans have died of Covid in 10 months because too many people believed in that garbage.
This is garbage. I work in healthcare and people are dying of COVID-19 pneumonia complicated by all kinds of other organ failure. Please talk with any local ICU nurse and then respond.
Another problem (for them) is the cash economy leaves no data trail, and no data, no money. The peculiar issue of data collection probably earns more revenue than bank usury. You never have to write off a bankrupt consumers data. On the matter of who is a consumer Wall st has been promising, at various economic low points that the US consumer is expendable, (for greener multinational pastures). Two things wrong with that, one is that big tech has no open market to China’s one plus billion consumers. Mortgages are key, the home is the personal storage facility. There is a class divide on this as well, less refined consumers tend to load up on junk, the homes of the very wealthy are austere. As the standard of living rises, consumers tend to drop compulsive shopping habits, which may explain why Fed has conducted a two decade policy to repress economic growth using low interest rates, which enables the corporate producers.
I never thought of it this way, but you’re absolutely correct. The people I know who are the biggest “shoppers” are either those who are lower class themselves or grew up that way, and are so thrilled now that they can afford “stuff.”
That also goes for homes, in my experience. The people I’ve known that have bought 8,000 square foot homes are the “fake rich,” who are heavily levered and extended, while the “truly” rich I know have 3,500 square foot (albeit, very nicely decorated and manicured) homes.
Even a 3,500 sq. ft. home is much too big for normal families. I have friends that have houses that big and have high utility bills, high taxes, high maintenance bills and a lot of empty, unused rooms.
To add, those friends are pretty well off but could easily lives in a smaller home. Maybe it’s the image they are cultivating.
Raised 2 kids in a 1,200 sq foot home. Now in a 1,700 sq foot home. The place is just fine, even with a couple of businesses running out of it. Who needs the taxes, utilities and maintenance of a big home when you don’t need the space???
I have lived in different size places in the US. Seems like about 450 sq ft per person is about optimum to me on a cost, maintenance, and cleaning criteria. Who wants to live in a large museum unless you are mega rich and need it to keep your status?
Totally agree. I live in a large house now but had 4 children in 1,200 sq ft total for many years when younger.
Old School,
I laughed out loud when I read your comment: I live alone in my Toronto condo. It’s 445 sq. ft. It has been fine for me. But I never had more than one of my parents at a time stay over, even though they are happily married.
Still… I want those 5 extra square feet! LOL!
The perfect house for my family of 4, through actual use of half a dozen sized homes (5200 to 1600 sq ft), is a 2700 sq ft home, with 4 bdrms, 3 full bthrms, and a 5000 sq ft storage crawl space ?.
(sorry for the 100+ word run-on sentence ?)
– “no data, no money”
No reason to be so categorical on this aspect of cash.
Detailed and accurate Data improves the money making, but not a key driver up to this point of history.
The details of business transaction are not recorded in payment history, so replacing the rest of cash with digital traceable money will not trigger a revolution in customer understanding and monitoring.
But the businesses themselves are pushed to more and more digital reporting to different regulatory and tax bodies.
That is in addition to the growing customer data exchanges.
My personal regret about the possible cash ban – the reducing of diversity makes the whole system less resilient. Proved by the history regularly.
The way to fight the cash ban—is to use cash. Definitely in small businesses where you should point out to merchants that U.S. currency can be microwaved to kill viruses, mold and bacteria that might be on it, that cash is immediate, earns 4 to 6% more profits for the merchant, without the credit card skim, plus no need to buy an $800 chip reader, which might need be replaced with new tech upgrades, and which does not work in a power failure or a system crash, cash cannot be hacked from a bank account, is subject to voluntary taxation and protects everyone’s privacy.
Oh, and you will boycott any and all merchants who do not accept cash, when and if the pandemic and the lockdowns end.
Plus cash helps the bottom quintile make ends meet by accepting cash payments for lawn mowing, child and adult care, tutoring, haircuts, yard sales, flea markets, car detailing, gutter cleaning…..
Can’t there be a person to person transaction without state and federal tax bodies getting involved.
Give Me Liberty or Give Me Debt!
Give me Librium or give me Meth!
I was on Haight St spring ’66 to spring ’67…the so called “summer of love” was anything but, according to good friends who unlike me, escaped Vietnam, one way or the other…..including many of Paulo’s neighbors I used to visit.
Vietnam had more and cheaper drugs, FWIW…….on Haight St with no money, it was mostly Red Mountain Burgundy…$1.49/gal….
This bifurcation of behaviours is also notable with respect to obesity, which is primarily a disease of the lower classes.
And occasionally, an occupant of an oval office.
“which may explain why Fed has conducted a two decade policy to repress economic growth using low interest rates, which enables the corporate producers.”
I think you may be on to something.
Maybe the fed will slow the buying of treasuries to allow rates to normalize for our banker buddies? Nah, the fed has said it will not slow purchases even if inflation runs at an unspecified level of hot for an unspecified period of time. It’ll be up to congress to bail out the banks again.
We went from manufacturing economy, to service economy, and now the future is a stock/bitcoin/imported goods economy? Talk about worthless productivity. People are going to forget about this $600 payment real quick when everything is expensive and taxes are raised on top of it. When they talk about the shrinking middle class I’m almost convinced they’re trying to accelerate the process. Trillions spent and has there even been a single new hospital built? At least that 401k has gains, for now.
Of course, 401ks having gains isn’t enough. It needs to hold those gains by the time people are ready to retire. And I don’t see this charade going on for another 50 years.
I don’t see this charade going on for another 50 months or possibly weeks Adding some physical gold and silver as well as Crypto to that portfolio is probably adviseable
Famous last words. Something ZHedgers will say. “This charade can’t go on!!!” 10 years later, it’s still going on.
@MonkeyBusiness
The ZH crowd don’t understand the origins, history and operations of money, and thus are stuck with a misunderstanding of its nature that ought to have died along with the gold standard almost 50 years ago now.
Per the government stimuluses, market mania, and public awareness of the Fed and a corrupt Congress:
One of the big league “thought leaders” (oh how I hate that Orwellian phrase) in a tangential line of my work recently posted on Facebook this query to his 8k+ followers:
“The US is facing its worst pandemic in a century. Thousands of people have died, millions more are impacted financially or lost their jobs. And the stock market is booming. Can someone please explain this to me?”
At first I suspected he was being facetious, and obliquely trying to raise the consciousness of his followers. But there were two depressing lines of thought on the responses he was getting. 1. Capitalism is evil and needs to be abolished. 2. The stock market is looking 10 years in advance so this is all normal and isn’t overbought.
I referred him to Wolfstreet, heaping praise upon Wolf and all you knowledgeable commentors (sp?).
He said he’d check it out, and I hope he and his followers get woke in a way that could actually help all of us.
Yet it is depressing. You could describe this thought leader and his followers as corporate employed life-coaches in Silicon Valley and elsewhere in related industries. I myself consider much of their work to be not so much white-wash but what I call mind-wash. Corporate CEOs hiring these people to help keep their staff blind to, or at least feel better about, what they are really doing to the rest of society, and their philosophy is dished out with enough virtue-signalling woke-ism for the PR and Human Resources Departments. Many of these people are well-meaning but the corporate BuddismLite™ sometimes grates like fingernails on a chalkboard.
Apparently, the lessons of the last century have been lost on our “leaders.” The crony capitalism of the Batista era in Cuba led to the Castro revolution. Enough people are seeing America’s version of “capitalism” for what it is and are demanding socialism (see your point above). If capitalists don’t police their own behavior, eventually a demagogue will appear and do it for them.
God help us.
There’s no lessons to be learnt there. The American government supported Batista. Cuba was just practice. It was always coming.
I don’t quite follow.
“Yet it is depressing.”
Where have you been the last 12 years? The response to the GFC caste this in stone. TPTB had the chance to come clean then, and didn’t. They can only double down and have been ever since. TINA
central bankers gather treasuries to cancel them , wake up. there is too much public debt, they take it to their balance to cancel it. They need to buy back more of it untill it will left 30%gdp in free market, then they will cancel it in their balance sheets and stop printing. Then goverment will issue new treasuries on 10%. Market will buy it because there will be no default risk when you only have debt of 30%gpd. therefore they cannot stop untill 30% is reached. Before that happens stocks will go to the moon.the longer it last the more vertically the stocks will go. there is no way to stop now, They have a plan to go for 30% and this has to be reached, therefore stocks has to go vertically. We are in a cycle of private confidence , therefore we trust in stocks and buy them to defend from possible inflation. After they reach 30% , the private wave will be finished and they will start public wave by offering treasuries with 10% yield. private wave is growing with stocks rising and will go further.
The Fed reminds me of that Company commander in Vietnam that said:
” We have to destroy the village in order to save it”
The Bernanke/Powell chairman of the Fed are wrecking the economy with all their phony below market interest rates, purchase of bad paper, and fake hellocopter money. Their motto is:
” We have to destroy the dollar and the economy in order to save it”
” We have to destroy the village in order to save it”
You can say the same about the c-19 response. What came first, the chicken or the egg?
I eat beans but I do not have to eat beans. I drive a 19 year old truck but I don’t have to drive a 19 year old truck. I repair old stuff to keep from buying new stuff that can not be repaired . I do these things to protect my self from,a government that will not protect the time value nor store of value of its currency and then allows its citizens to be prayed upon by this failure. I can only control these things as all other things are controlled by government. The Fed and its benefactors can go to hell.
Well said.
Bit of conspiracy over there. That part about consumerism and banks.
It’s completely subjective. Nobody forcing us to consume, money just made available for us. Wich is good by the way.
Ask any keynesian: – what’s gonna happen if we slow consumption?! :)
Lower cost of living. Slower releases of new iPhones.
Wolf, houshold debt data would be really handy here. To see the bigger picture.
My friend use their FED PPP loans to pay off credit card debts. Bank will get their 25% cut for sure. Cards will be available to max again, in some distant future. It’s a win win.
Wow another 2K possibly coming? This country is out of control.
And remember, it’s $2k per person, so a family of 4 gets $8k. I have no doubt whatsoever the Republicans will cave on this. They’re certainly not giving conservatives any reason to vote for them.
To clarify, I MIGHT be on board with the $2,000 IF we were paying off debt during good times and IF the money was actually needed to stimulate the economy. But it’s not. It’ll all go to stimulate Apple, Amazon, Walmart, and the Chinese manufacturers. No one has been able to articulate any reason why the solution to 15% unemployment is to give thousands of helicopter dollars to the other 85%.
Election is over; the stimulus is going to remain 600 per person. No student loans will be forgiven. The forbearance programs will be allowed to come to an end for some other program of re-modification where paperwork gets reshuffled and lost by the banks and program adjusters.
This summer the band aid comes off, because more harm is done to the election campaigns when delaying the inevitable. Folks will start to realize real soon that they don’t have to be in debt if the sell their mortgaged properties.
Many (51%) of unemployed debt slaves will be shocked when they owe thousands of dollars of income taxes on the unemployment payments they got in 2020. Yet PPP biz loans(grants) do not owe any federal taxes (and are allowed to deduct expenses from using this free money which is doubles the perk). This could hurt consumption in March/April of 2021. Corporate states of America wins again because a majority of people do not understand complex tax laws.
Per MarketWatch:
Thirty-seven percent of people didn’t know jobless benefits were taxable income, according to a June survey from Jackson Hewitt, the national tax preparation chain. Just over half of the 1,000 people surveyed (51%) didn’t know they had to ask for withholdings on their benefits.
There will be a push by the Democrats to cancel that debt retroactively. Mark my words.
Go spray paint them somewhere……just for the record, ya understand……..;-)
Banks get off on the consumer being in debt .. they want us applying for new cards ..
So .. why are we the consumer lacking in confidence when applying for new cards or a higher limit ??
Is it that we simply lack confidence in our worthiness in that world of debt ??
I can spend with gay abandon .. trust me.
Or am I just a bit player & not welcome in the credit card sphere ??
I’m only a nickels & dimes operation .. hey .. but as a collective surely we are worthy.
Count your pennies & the pounds will take care of themselves type mentality.
It’s not get rich quick but you get there eventually ??
I kind of feel like my parents migrated to the wrong country.
I have a sense that the US would have suited me better.
Well said Wolf Richter !!