Thursday, December 9, 2010

More on Consumer Credit

Karl Denninger details why the jump in non-revolving consumer credit was not necessarily all it was made out to be (hat tip Jim Driscoll):

Except for the idiots borrowing to go to school [who] are going to find that they will never be able to pay it back, having bought into the Kool-Aid (and who will be destroyed by it), the actual non-revolving debt acceptance was down at a 58% annualized rate of change!

That's not a decline -- it's a collapse.
Well then.

Here's the supporting data (assuming Federal owned consumer credit is all student loans).

For those that like ranting... enjoy as I turn it back to Karl:
While the "pumpers" all said that strong auto sales were part of the recovery, that's a lie; "finance companies" (which include GMAC, Ford Motor Credit (FCZ), etc.) declined at a nearly 6% rate for the month, which on an annualized basis is just plain nasty.

"Positive surprise"? Oh hell no. Not only are consumers shunning credit cards, they're shunning credit of all types -- except for young people, who continue to be bamboozled into taking on debt for a so-called "education" into a collapsing credit, salary and employment environment.
Source: Federal Reserve


  1. There are two components to the federal non-revolving debt category, that have to be treated differently.

    The gov is making direct student loans. You can discount that as not real if you like, but is only part of the red bars in your graph.

    The gov is also buying securitized student loans from banks. This is probably a big part of the red bars, but it is just a transfer, and there is corresponding decrease in bank holdings that offsets it. In particular it is not new lending and cannot be tossed out as an irrelevant category.

  2. It's not irrelevant, but it does show that consumer credit is rebounding due to government support and shows how important fiscal and monetary support still is to the recovery.

  3. A great example of how numbers lie. Don't listen to the "pumpers". Look at the numbers behind the numbers.

  4. Look at the numbers behind the numbers !!?? OK...
    average income 60-70 K per household US ! just misery .
    Non- revolving credit = Can't-revolving credit !

  5. SPECTRE of DeflationDecember 14, 2010 at 6:00 AM

    I enjoy truth, and after years of this nonsense, does it really count as ranting when we are lied to constantly? They continue to piss on our collective legs and then say it's rain. Karl has been on this whole planned demolition from the very start, so no one can say we didn't see it coming.