Credit card debt the next bubble

[werepossum]

So, uhh, your loan officer took advantage of you somehow? Or the market was anomalous at that moment?

There is zero reason for investors to select private label MBS over US govt guaranteed GSE paper other than greater returns. Zero. Market theory tells us that. Which is not to buy into the whole rational markets idealization other than slightly.

My loan officer took advantage of me through my own ignorance - which makes it my fault, not hers. She also pushed very, very hard for an adjustable rate loan which, had rates remained steady, would have been only a quarter point lower than my fixed rate after two years. I didn't take the adjustable rate loan because I demanded all the details and it was a bad risk. I should have been equally as educated on the type of loan and other details. My loan officer's job is to sell profitable financial services for her bank, not to look out for my best interests, and although I well understood this, I did not do the research I should have done.

My point wasn't to complain though; except for some onerous insurance costs - again, due to my failure to research and learn that 20% down would have avoided this on a conventional loan - I paid no extra for the GSE loan (although I could have put down 20%, gotten a conventional loan, and saved money.) My point was to say that at least when I bought my house, GSE-backed loans were offered at the same exact rate as conforming non-GSE loans.

 

[alkemyst]

sarsipias1234. if you are really hurting financially (don't remember if you are the same dude), learn Cisco stuff. CCNA and CCNP. It's a great field. Good income and mentally fulfulling. You need to read a lot. CCNA is about 600 pages to digest, CCNP about 2500.

I won't say I wasted my time taking down 7 years of college, but I will say that was bad at bang for buck. Being able to draw blood, analyze it and even apply field medicine is a good gift to have in my tool belt.

 

[sarsipias1234]

The origin of the word compete is the latin word competere.

competere (intransitive)
to compete, to vie, to rival
to be due, to be owing, to have a right to
to be up to, to lie with, to be somebody's duty

So to compete is to be somebody's duty or have someone be in debt to you.

Slaves or chattel could not own property.

 

[charrison]

Looks like things are unwinding...

 

[Engineer]

http://money.cnn.com/2011/09/21/pf/credit_card_debt/index.htm

Credit card debt up $18 billion in the 2nd quarter.

NEW YORK (CNNMoney) -- Consumers are racking up credit card debt like it's 2008.

Americans added $18.4 billion to their debt load in the second quarter, a 66% increase from the debt they accumulated in the same quarter last year and 368% more than they tacked on in 2009, according to credit card research firm CardHub.com.

 

[Jhhnn]

Looks like things are unwinding...

Sounds peachy. This won't be unwinding any time RSN, however, and is one helluva lot bigger-

http://www.theatlantic.com/business...rtgage-debt-declines-below-2007-level/240298/

A few 10M households, chained to the oars of the banking elite, courtesy of the Ownership Society.

Helluva pitch, though, with great emotional appeal. God, guns, gays, greed, tax cuts, adulation of the rich, Freedom, terror and bloodlust woven together into an almost seamless deception.

The fact that it all fell apart was just an accident, I'm sure. Honest. Who could have known?

 

[Engineer]

So based on that chart, the AVERAGE American (family?) only spends 16% of their DISPOSABLE - after tax income on ALL of their monthly bills (mortgage, credit card, automobile loans, property tax, etc (per the website on the chart))?

Really?

No fucking way?

Edit: Looks like this is calculated based on ALL payments in the US divided by ALL disposable income in the US. I guess the lower mortgage rates (for those that can get them on refinance) and the idea that far fewer people are buying cars are weighing in. Considering that the average worker's share of the national income is at it's lowest point in history.....

Still don't see how this is going down unless you factor in the fact that millions are no longer paying their mortgage payments, filing bankruptcy, etc. because wages are flat out not going up enough to cover this.

 

[Jhhnn]

"Averages" are tricky, Engineer. It's not about the average family, or the median family, but about the numbers. Think of it as an abstract indicator, with change being the relevant factor. Use it as an indicator of direction & comparison to the recent past, not as an actual numerical value. The chart Charrison offers is particularly abstract, with an enormous number of underlying variables.

 

[alkemyst]

The origin of the word compete is the latin word competere.

competere (intransitive)
to compete, to vie, to rival
to be due, to be owing, to have a right to
to be up to, to lie with, to be somebody's duty

So to compete is to be somebody's duty or have someone be in debt to you.

Capital evolved from capitale, a late Latin word based on proto-Indo-European caput, meaning "head" — also the origin of chattel and cattle in the sense of movable property.

Slavery : the state of a person who is a chattel of another.

Notice how the Latin word capitale refers only to movable property and not real estate.

Slaves or chattel could not own property.

Look at the the mortgage crisis recently in which people have been deprived of their real estate in America.

Seems like we do not inherently have the right own property.

Yet the right to own property is the foundation of wealth in a capitalistic society.

Doesn't this makes any American citizen who does not own real estate or immovable property without debt a slave by default?

By immovable assets i'm assuming that the origin definition is also referring to assets that are impractical to move such as gold.

Property is not necessarily the indicator in a Capitialist society. I don't know where you are getting your info.

However, in the US more or less no one really owns the property they are on. Some do. It's more or less a moot point though.

The 'mortgage' opened up the doors to the average citizen to be able to buy a home today, based on savings in the future. It's not a bad thing if done properly. The biggest issue outside those looking to flip property and got burned or that signed loan docs in hopes of refinancing to better terms later, are those that buy too much house.

 

[Engineer]

"Averages" are tricky, Engineer. It's not about the average family, or the median family, but about the numbers. Think of it as an abstract indicator, with change being the relevant factor. Use it as an indicator of direction & comparison to the recent past, not as an actual numerical value. The chart Charrison offers is particularly abstract, with an enormous number of underlying variables.

Yea, I read that from digging down into how the numbers are derived (several links down from the one listed on the chart). It was stated that the information is very hard to derive, but because it was consistent in the way it's derived, it's a good indicator of which way we're heading.

With that said, it indicates that the trend of debt is going down. What it doesn't say is how or what people are getting he debt down to push the chart down, especially how they are doing it. Certainly not increased wages. Also, it's very hard to believe that that, in general, people only pay 16% of their leftover income to service their debt (mortgages, insurance, property taxes, credit card debt, auto debt, any other debt). I just don't buy that number. Who is factored into that number (billionaires, millionaires?). Considering that the median income in the US per household is around $43,000, I just don't see it (but do recognize that the trend is down - but from the masses or those at the top?)

 

[Jhhnn]

Yea, I read that from digging down into how the numbers are derived (several links down from the one listed on the chart). It was stated that the information is very hard to derive, but because it was consistent in the way it's derived, it's a good indicator of which way we're heading.

And that's basically all it is. It doesn't show if debt has been paid or written off, destroyed. I rather suspect that foreclosures & the writeoffs necessary have a big effect on the chart, for example. It's a very broad measurement.

 

[TakeNoPrisoners]

Good thing I don't rely on credit.

Sucks if you do.

 

[blackangst1]

Good thing I don't rely on credit.

Sucks if you do.

Credit is a wonderful servant, but a terrible master.

 

[sarsipias1234]

Here's another way of putting the data from:

http://education.cardhub.com/q2-2011-credit-card-debt-study/

Consumer Credit Card Debt and Charge-off Data (in Billions):
Outstanding Revolving Consumer Debt Outstanding Credit Card Debt Quarterly Credit Card Charge-Off Rate Quarterly Credit Card Charge-Off in Dollars
Q2 2011 $787.4 $771.7 5.58% $10.8
Q1 2011 $779.6 $764.0 6.96% $13.3

Q4 2010 $825.7 $810.2 7.70% $15.6
Q3 2010 $806.9 $790.8 8.55% $16.9
Q2 2010 $817.4 $801.1 10.97% $22.0
Q1 2010 $828.5 $811.9 10.16% $20.6

Q4 2009 $894.0 $876.1 10.12% $22.2
Q3 2009 $893.5 $875.6 10.1% $22.1
Q2 2009 $905.2 $887.1 9.77% $21.6
Q1 2009 $923.3 $904.8 7.62% $17.2
Q4 2008 $989.1 $969.3
(Source: CardHub.com, Federal Reserve)

In Q2 of 2011, outstanding credit card debt increased relative to Q1 2011: $7,644,000,000

In Q2 2011 the credit card charge-off rate in dollars was: $10,764,545,400

Net Result in Debt Load: $18,408,545,400 increase

Relative to Q1 2010: 66% more than the increase in the same quarter in 2010

Relative to Q1 2009: 368%% more than the increase in the same quarter in 2009

CONCLUSION: As was the case in the previous 2 years, consumers start reversing any debt pay down from the first quarter with a net increase in credit card debt in the second quarter. What is worrisome about 2011 is that the debt in Q2 2011 is a staggering increase of almost $18.5 billion, which is 66% higher than the increase observed on the same quarter one year ago and 368% higher than the increase observed two years ago.

 

[alkemyst]

It's hardly a surprise being so many only have their credit for income.