US consumer borrowing rises to record $2.75T

[DucatiMonster696]

More evidence that the economy is being pushed along by Americans digging themselves into greater and greater debt. With the anemic job numbers we are experiencing this ride can only last so long.

http://finance.yahoo.com/news/us-consumer-borrowing-rises-record-200105723.html

US consumer borrowing rises to record $2.75T
US consumer borrowing rises to record $2.75T in October, helped by more credit card debt


WASHINGTON (AP) -- Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.

The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.
Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.

The strong rise in borrowing came in a month when American cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.

Many consumers may also have scaled back because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.
Consumer spending drives roughly 70 percent of economic activity.

Economists think that it could bounce back in November. But the underlying trend remains weak because with unemployment remaining high, households don't have the incomes to spend.
Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans.
Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17 percent lower.

During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22 percent higher than in July 2008. That reflects in part the fact that many Americans who have lost jobs decided to go back to school to get training for new careers.

 

[michal1980]

just like goverment

 

[Engineer]

It's the only way to keep the economy in the US going since the good, wealth creating jobs are being sent overseas from the (soon to be called former) middle class. The foundation keeps on being destroyed and the building will fall. Tick...tock...tick...tock...

 

[DucatiMonster696]

It's the only way to keep the economy in the US going since the good, wealth creating jobs are being sent overseas from the (soon to be called former) middle class. The foundation keeps on being destroyed and the building will fall. Tick...tock...tick...tock...

Eroding the value of the currency in which the material of that foundation is built upon on is not helping.

Being hostile to businesses and keeping taxes on profits made of overseas high is not helping.

Pretending that you can levy the biggest tax hike in US history onto US citizens and US businesses in the way of Obamacare is not helping.

You do not encourage growth by raising taxes. Taxation is a retrograde action which discourages economic growth. This is why government heavily taxes certain behaviors by levying high taxes on goods and services which government wants to discourage, e.g. smoking and drinking.

 

[Engineer]

You do not encourage growth by raising taxes. Taxation is a retrograde action which discourages economic growth. This is why government heavily taxes certain behaviors by levying high taxes on goods and services which government wants to discourage, e.g. smoking and drinking.

We have the lowest taxes in over 1/2 century. We should be booming. We are not. Tax cuts, like the debt that you linked, is the only means that the politicians have to mask the degrading middle class wages, even to the point of going negative on federal income tax in the form of credits (at the expense of the national debt). We're running out of tricks to fix the "real" problem.....

 

[Jhhnn]

We have the lowest taxes in over 1/2 century. We should be booming. We are not. Tax cuts, like the debt that you linked, is the only means that the politicians have to mask the degrading middle class wages, even to the point of going negative on federal income tax in the form of credits (at the expense of the national debt). We're running out of tricks to fix the "real" problem.....

There's no "real" problem for the uber wealthy- they've gone international & boosted their own wealth & income by sucking this country dry, substituting credit for wages, investing in higher return opportunities.

Righties can't figure it out, of course- they worship & adore the people selling them out more than ever. They think the Job Creators are taking them along for the ride, when they're being jettisoned like a first stage booster in an orbital launch...

 

[OverVolt]

Its the bag holder game. So long as there is a greater fool you can take out a big loan and start a business or get a degree or buy a house, or a fleet of cars etc.

Once everyone is tapped out and borrowing drops off a cliff those who are underwater on their loans = MASSIVE DEFAULTOCLYPSE.

Interest is supposed to represent risk but the system is being messed with. The debt/MBS/banks getting monetized forces the interest rate lower, making people think it is safe to take out loans. Do you really think the default rate on a house is less than 4%?

Do you really think the risk in owning Japans bonds is less than 0.8%?

The financial system is totally bizarre right now. Interest should naturally be increasing to represent the increased risk, but this would bring about a crash which is deemed too expensive so we just make even bigger loans with reckless abandon but who is going to be the greater fool for us to pass the problem onto?

Back when I was growing up my parents had the "well its not my problem" mentality because they knew with 100% certainty there would be greater fools to follow and they could just rack up debt now and not really worry too much. someone else would be taking out an even bigger loan at a later time to keep the big game going.

 

[Attic]

No problem, just print more dollars and the truck loads of debt won't be worth half what they were when they bought something. This will of course benefit the wealthy who are vested in vehicles that can manuever around this crap.

Middle class will take it in the ass on this one. Poor will require more gubment help than they do today and tommorow. They'll be stuck with the same shitty wages trying to pay off debt with the little they have left over after buying groceries and gas that have doulbed in cost. In fact after using stagnant wages to pay for increasing cost of living (due to huge debt and money printing) they'll guess what?>@ Take out more debt they can't pay back.

Who said it's no fun to be run by a bunch of idiots who claim to be for the middle class while running policy that will annhilate and enslave them?