The Debt Explosion in America: "Serious" people don't care; Introducing!

One thing that separates Serious Commentators and us paranoid blogger types is how they don't really talk about the disintegrating underpinnings of the American economy, and we do. See the Subprime Mortgage Blues and this one about the coming wave of defaults as well.


Here's yesterday's news from the, the Mortgage Lender Implode-O-Meter, a site that may deserve a place of honor on the Hong sidebar: Mortgage crisis to hit holders of risky derivatives, SouthStar Funding Goes Under, M&T Bank says Alt-A loan woes will hurt earnings and finally New Century Files for Bankruptcy Following Subprime Defaults. And why not:!

Fortunately there's a couple regular folks at the Agonist keeping tabs on it. Bonddad (and the Bonddad blog) keep track of these messed-up trends: Check out The Debt Explosion, Income Inequality and Economic Fairness:

 Albums B84 Bonddad Hhdebt-2

Basically this is credit cards plus mortgages. Since Bush got into office it's just kept rising and rising. Credit card spending and mortgages have bloated evermore with Greenspan's easy credit access. So many shady mortgages were issued by everyone and repackaged as "securities," in other words, securitized into the financial market. The result is this ever-escalating debt bubble, buttressed by an overinflated housing market built upon McMansions that inhabitants can't really afford.

 Albums B84 Bonddad Savings-1

Here's America's Personal Saving Rate - the difference between $ spent and saved on the individual level. But hey, in 2005 that fucker went BELOW ZERO. Nobody cares. They should. It means that we are living on the credit cards, and any more turbulence in the economy (another terror attack, Persian Gulf oil shock etc) and we are going right over the edge. Check out Bonddad's Savings Crisis Continues for more on this angle. Here's a bit:

Personal saving -- DPI less personal outlays -- was a negative $119.6 billion in February, compared with a negative $115.1 billion in January. Personal saving as a percentage of disposable personal income was a negative 1.2 percent in February, the same as in January. Negative personal saving reflects personal outlays that exceed disposable personal income. Saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods.

Check Tha Wall Street Journal, yo:

"Having a credit card is kind of like being a millionaire," says Scott Davis, a 37-year-old facility maintenance worker who lives in Arlington, Texas. He says he and his wife, whose household income is $38,000 a year, had "seven or eight" credit cards they used to buy sporting goods, go on vacations and remodel their home.

Mr. Davis isn't unusual. According to Fed data, outstanding debt, including mortgages, for families in the bottom 50% of earners -- those with household income below $43,000 -- almost doubled to an average $40,676 in 2004 from an inflation-adjusted $20,733 in 1992. Debt outstanding in the top 50% of households rose 83.5% to $150,821 in 2004 from $82,214 in 1992.

Ray Hooper, education and housing director at Consumer Credit Counseling Service in Dallas, says with credit conditions so easy, lower-income consumers have been able to "get what they want, even though they can't afford it." And the easy credit isn't just related to subprime lending. "It's not just the house," adds Mr. Hooper. "It's the furniture, the appliances, the lawn mower."

To keep pilfering Bonddad's blockquotes, Barron's sez:

So far this decade, nominal gross domestic product has risen at a 5.1% pace, while outstanding credit-market debt is increasing at 8.4%, notes Punk Ziegel analyst Richard Bove. "If the long-term rates were to rise further or incomes grow at slower rates, then it seems highly likely that there would be a rash of defaults throughout the economy," he says.

And of course income inequality:

Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.

The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.

The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

That's all I'm putting for now. But no "serious" people care, at least no one they're gonna let onto CNBC. As long as the fatcats eat well, it doesn't matter if the rest of the economy fucking disintegrates. Well done, baby boomers!

With American manufacturing seriously damaged and uninsured healthcare expenses on the rise, the ever-reliable American Consumer is supposed to keep pushing this wheel, even though he and she can't afford it. Of course no one cares that the trade deficit with China spirals to historically massive levels.

 Lk2 X Larrykudlow2

Kudlow: Keep moving along, nothing to see here! Keep spending on the credit card, Fat America, we don't give a fuck!!!

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