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Saturday, December 17, 2016

Are Debt-Laden American Consumers About To Get Crushed By Higher Interest Rates?

American consumers love debt, wall street loves securitizing that debt and collecting massive fees for selling it and pension funds, with no viable alternative investments courtesy of accommodative Fed policies, love buying that debt for the extra 25bps of yield it provides. It's a "win, win, win", right?

Well, until it's not. While real median incomes in the U.S. have been stagnant for almost a decade, real household personal consumption has continued its steady rise as American's have simply replaced lost income with new debt. But, with household leverage near all-time highs and interest rates on the rise, we suspect this could all end very badly for the U.S. consumer and those pension funds that were forced to "stretch for yield."

Per a Bloomberg article posted today, the average U.S. household is carrying roughly $133,000 worth of debt, spread between mortgages, credit cards, auto loans, student loans and the newly-popular, crowd-funded, personal loans.



Anonymous said...

Proof that Reaganomics doesn't work.

Anonymous said...

Since the housing market is in the crapper, their strategy is to up the rate and then people will panic and run out and make their move, before rates go even higher.

Its a mind game, and you are the test subjects.

But you will lose either way. Housing prices are still too high because everyone is still under water and trying to get back what they over paid for their homes. They figure since interest rates are low you can still afford to overpay for your home and they can get out from underneath it. Its either that or they are tying to sell it for what they owe and dump it before it goes into foreclosure.

Problem is, your house is a piece of crap, employees aren't making any money since no one has seen a raise in 5 years and now obama care is raping your wallet.

Sadly this ghetto community may never recover.

There is some fool on here from florida slappin himself on the back and saying how wonderful it is down there and everyone else has recovered. He is either a liar or simply uneducated.

I know people in many other communities everywhere and they have not recovered either. It is worse here because it is nearly impossible to find a job that pays a livable wage and has affordable healthcare.