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Confusions, Delusions, and Illusions
Confusions, Delusions, and Illusions
Two recent surveys, along with numerous other studies and data, reveal most American households to be living on the brink of catastrophe, but continuing to act in a reckless and delusionary manner. There have certainly been economic factors beyond the control of average Americans that have resulted in real median household incomes remaining stagnant for the last 36 years. The unholy alliance of mega-corporations, Wall Street and bought off corrupt politicians have gutted the nation of millions of good paying jobs under the guise of globalization, while utilizing debt, derivatives and financial schemes to enrich themselves. The malfeasance of the sociopathic privileged class does not discharge the personal responsibility of citizens for living within their means. A lack of discipline, inability to delay gratification, failure to understand basic mathematical concepts, materialistic envy, absence of critical thinking skills, and a delusionary view of the world have left the majority of Americans broke and in debt.
The data that captured my attention was how little the average American household has in savings. Roughly 62% of Americans have less than $1,000 in savings and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com. This dreadful data is reinforced by a similar survey of 1,000 adults carried out earlier this year by personal finance site Bankrate.com, which also found that 62% of Americans have no emergency savings for a medical crisis, car repair, or unanticipated household expenditure.
The fact is these are not highly unlikely scenarios. They happen every day as part of our routine existence. Everyone gets sick. Every car eventually needs new tires or an engine repair. Every home will need a new hot water heater or roof at some point. It is foolish and short sighted to not expect “unexpected” expenditures.
…click on the above link to read the rest of the article…
This Is Another “Subprime” Waiting to Blow
This Is Another “Subprime” Waiting to Blow
Dow down 239 points yesterday – or 1.5% – after Japan posted its biggest one-day gain in seven years. This is getting interesting again. If it is just “volatility,” as Wall Street’s shills in the press maintain, it will probably pass soon. Everything will be okay. Back to routine imbecility before the end of the month.
But if these whipsaw movements are heralding a bear market, U.S. stock prices could be cut in half… or more. And they may not recover for 10 to 20 years. (Catch up on the details of our bear market forecast here.)
Which is it? Bull or Bear? No one knows, of course. But it looks to us as though the whole shebang is getting ready to collapse. So far, the correction has trimmed $12.5 trillion off the value of global stock markets. There are a few reasons for stocks to go back up… and many reasons why they might want to go down further.
The 2008 global financial crisis was centered on mortgage debt. There was too much of it that couldn’t be repaid. When the value of the collateral – homes – headed down, the bubble popped.
Today, consumers have about the same amount of debt. But now the excesses are in auto loans and student debt. As you can see below, total auto loans stood at about $781 billion in 2007. Today, they’ve topped $1 trillion. And student loans have more than doubled over that time to $1.3 trillion.
Again, the collateral is falling in value. Used-car prices fall, as leases expire and more used cars hit the market. As for student debt, the “collateral” is the earning power of the person who borrowed the money.
…click on the above link to read the rest of the article…
“There Are Big, Big Problems” – The Shocker Crushing The Economy Revealed
“There Are Big, Big Problems” – The Shocker Crushing The Economy Revealed
We are grateful to Alexander Giryavets at Dynamika Capital for pointing us to something which is far more troubling than even the Atlanta Fed’s collapse in Q1 GDP tracking: namely the latest Credit Managers Index for the month of March which “deteriorated significantly over the last two months and current readings stand at the recessionary levels not seen since 2008.”
To be sure, we have previously shown the collapse in consumer debt as reported by the Fed, which as we noted, just suffered its worst month for revolving credit since December 2010 and explains “why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.”
It turns out it may not have been just a matter of demand: apparently something very dramatic has been happening in February and especially in March. Instead of spoiling the punchline, we will leave it to the National Association of Credit Managers to explain what happened:
From the latest NACM Credit Managers Index:
We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather. There is quite obviously some serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward. These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage. The data from the CMI is not the only place where this distress is showing up, but thus far, it may be the most profound.
…click on the above link to read the rest of the article…
‘Welcome Signs Of Cooling’ In Canada’s Overvalued Housing Markets: IMF
‘Welcome Signs Of Cooling’ In Canada’s Overvalued Housing Markets: IMF
Canada’s housing markets will cool this year, leading to a more “balanced” economy — one that is not as dependent on growing consumer debt, the International Monetary Fund says.
In a report released Friday, the IMF estimated house prices are overvalued by 7 to 20 per cent, with “significant regional differences” in the amount of overvaluation.
That’s a somewhat lower estimate than the Bank of Canada, which recently estimated house prices to be as much as 30 per cent overvalued in some markets.
“Canada’s housing market rebounded in 2014, fueled by low and declining interest rates, although there are some welcome signs of cooling especially in overheated markets,” the IMF report stated.
“Welcome” because the IMF sees risk to Canada in growing household debt. The organization is worried that the country’s economy continues to rely too heavily on consumer debt, and that the kind of debt Canadians are taking on is riskier than it used to be.
…click on the above link to read the rest of the article…
