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OT: Some worrisome trends in the economy
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meloshouldgo
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5/20/2018  11:50 PM
Presenting a group of articles pointing to some worrisome trends. We are reaching pre-financila crisis levels in certain key indicators. And as ususal subprime loans are to blame for a large part, as are low interest rates etc. I am pasting in excerpts and linking to the entire articles.

Credit Card Defaults
https://www.zerohedge.com/news/2018-05-19/credit-card-delinquencies-spike-past-financial-crisis-peak

Authored by Wolf Richter via WolfStreet.com,

Subprime is calling...
In the first quarter, the delinquency rate on credit-card loan balances at commercial banks other than the largest 100 – so at the 4,788 smaller banks in the US – spiked in to 5.9%. This exceeds the peak during the Financial Crisis. The credit-card charge-off rate at these banks spiked to 8%. This is approaching the peak during the Financial Crisis.

A sobering set of numbers the Federal Reserve Board of Governors releasedthis afternoon.

But overall, across all commercial banks, including the largest banks with the largest credit-card loan balances outstanding, the delinquency rate was 2.54% (not seasonally adjusted). This overall rate was pushed down by the largest 100 banks, whose combined delinquency rate in Q1 was 2.48%.

These large banks have been offering appealing incentives to consumers for years, and they’ve been going after consumers with the higher credit ratings, and they’ve been following good underwriting practices – having not yet forgotten the lesson from the last debacle – and this conservative approach is now helping to keep losses down.

But the thousands of smaller banks couldn’t compete with those offers, and so they got deeply into subprime cloaked in sloppy underwriting. This way, they were able to reel in new credit-card customers that the big banks didn’t want, and those customers needed the money and charged up their new cards in no time, and the interest rates of 25% or 30% looked good on the banks’ income statement and helped maximize executive bonuses, yes even at smaller banks.

But turns out, those banks had reeled in the most fragile customers and had eagerly doused them in irresponsible levels of debt at usurious interest rates – and now what? These customers won’t ever be able to pay off the balances or even pay the interest. For many of them, there’s only one way out. This caused the delinquency rate to spike from 3.81% to 5.90% in just three quarters.

This chart shows delinquency rates for the largest 100 banks (blue line) and for the remaining 4,788 banks (red line):


Auto Loan Defaults

by Tyler Durden
Mon, 05/14/2018 - 19:44

One month ago, when discussing the most recent trends in the US subprime auto loan space, we revealed how despite a virtual halt in direct loans by depositor banks to subprime clients following the financial crisis, the US banking sector now has over a third of a trillion dollars in indirect subprime exposure, in the form of loans to nonbanks financial firms which in the past decade have become the most aggressive lenders to America's sub-620 FICO population.


As we further explained, the banks' total indirect exposure to subprime loans – not just auto loans, but also subprime mortgages, and subprime consumer loans – could be pieced together through public filings, and according to FDIC reports, bank loans to nonbanks subprime lenders soared this decade, with the following 5 names standing out:

Wells Fargo: $81 billion, up from $13.4 billion in 2010
Citigroup: $30 billion, up from $4.1 billion in 2010
Bank of America: $30 billion, up from $2.8 billion in 2010
JP Morgan: $28 billion, up from $10.4 billion in 2010
Goldman Sachs: $22 billion
Morgan Stanley: $16 billion
...

Continue Reading https://www.zerohedge.com/news/2018-05-14/subprime-auto-loan-default-rates-are-now-higher-during-financial-crisis

Companies are over-leveraged

They'll soon be unable to make payments to service their debt. Companies like GE and Sprint are very close to real collapse; Sprint just got a lifline from the T-Mobil merger announcement
http://money.cnn.com/2018/03/16/investing/ge-stock-debt/index.html


Trump vs. Trade Deficit, I'll take the Deficit please!

Praise Of Trade Deficits By Michael Schmidt

There is a common perception in the media and in the general public that trade deficits are bad news. The conventional wisdom is that these deficits are a drag on gross domestic product. Surely, it must bad for a country's economy to import more than it exports, right?

In reality, the trade deficit may be more pro-cyclical, moving in the same direction as local GDP. In this article we will examine the correlation between trade deficits and GDP to show that sometimes it doesn't pay to follow conventional wisdom.

What Are Trade Deficits?
Trade has evolved over the years and is now defined as the annual amount spent by individuals, companies and government agencies on foreign-made products, minus the amount spent by foreign entities on domestically made products. Countries rarely import exactly as much as they export so there is usually a trade imbalance. A deficit is created when there are more imports than exports. (To learn more, see What Is International Trade?)

The difference between a country's imports and exports (called the balance of trade) differs across business cycles and types of economies. For countries where growth is led by exports like oil, industrial goods and other natural resources, the balance of trade will move positively toward a surplus during an economic expansion. The reason for this is that the host country exports products that are in demand during growth periods at a greater rate than it imports goods.

In contrast, in countries where growth is led by demand, like the United States, the trade balance tends to worsen during growth stages of the business cycle. This is because these economies need to import even more goods than usual in order to grow. Combine this with a negative national annual personal savings rate and you've got an ever-increasing trade deficit.

Now that we know a bit about trade deficits, let's look at the correlation with GDP.

Read more: In Praise Of Trade Deficits https://www.investopedia.com/articles/economics/08/trade-deficit-effects.asp#ixzz5G6X8F6ur

I cannot teach anybody anything. I can only try to make them think - Socrates
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Gudris
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5/21/2018  3:18 AM
That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.
meloshouldgo
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5/21/2018  7:16 AM
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

I cannot teach anybody anything. I can only try to make them think - Socrates
Cartman718
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5/21/2018  9:41 AM
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

It's not the American dream. This is a worldwide phenomenon. It's not like other democracies are better off. It's not like other monarchies or dictatorships are better off.

Nixluva is posting triangle screen grabs, even when nobody asks - Fishmike. LOL So are we going to reference that thread like the bible now? "The thread of Wroten Page 14 post 9" - EnySpree
arkrud
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5/21/2018  11:44 AM
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

We have to much education opportunities in liberal arts and social services with severely reduces science and technical education. We need more trade education as alternative to the college also. Another issue is difficult times people have to brake into closed professional clubs medical, low, and other licensed high paid trades become.
De-politicization of college was never working and they were always leaning left to much. Nothing wrong with that. It is a good balance to various military, religious, and corporate institutions which are always leaning to the right. Demographic changes which will soon make traditional black-and-white US society into more Latin-Asian dominated are also moving US society in more conservative direction. Learning Hindu and Chines in college will go a long way in tomorrow America.

"There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." Hamlet
meloshouldgo
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5/21/2018  11:49 AM
Cartman718 wrote:
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

It's not the American dream. This is a worldwide phenomenon. It's not like other democracies are better off. It's not like other monarchies or dictatorships are better off.

I wasn't critiquing democracy, I was critiquing the idea that it can be carried out by the stupid and the uninformed. Secondly, education isn't looked upon as evil left wing manipulation in any other developed country. But I digress.

This thread was really about what's happening economically right now. Predatory lending is alive as well and its the primary mechanism of wealth extraction till date.

I cannot teach anybody anything. I can only try to make them think - Socrates
arkrud
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5/21/2018  11:52 AM
Cartman718 wrote:
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

It's not the American dream. This is a worldwide phenomenon. It's not like other democracies are better off. It's not like other monarchies or dictatorships are better off.

The gigantic switch from natural-resource driven civilization to human-resource driven is under way.
Countries which consider to rely on digging oil and other natural resources and grabbing more land are destined to fall into chaos and disintegrate.
Countries which are making the best effort to improve local human potential and attract and assimilate as many best people from abroad as possible will grow and get stronger.
Having more land and crowds of people without skills and education became a huge drag and disadvantage. Both have no use but just require huge resources to sustain.

"There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." Hamlet
arkrud
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5/21/2018  12:01 PM
meloshouldgo wrote:
Cartman718 wrote:
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

It's not the American dream. This is a worldwide phenomenon. It's not like other democracies are better off. It's not like other monarchies or dictatorships are better off.

I wasn't critiquing democracy, I was critiquing the idea that it can be carried out by the stupid and the uninformed. Secondly, education isn't looked upon as evil left wing manipulation in any other developed country. But I digress.

This thread was really about what's happening economically right now. Predatory lending is alive as well and its the primary mechanism of wealth extraction till date.

Hot the case in NY/NY/Connecticut are and so in California.
Indian, Chines, Russian, and other Asians are grubbing properties for big chunks of cache or are getting great financing due to high family incomes and wealth.
Wealth of the world is moving into US because of no other safe place to go. This was always the case and will always be.
That's why every dollar used for military will return 10 flowing back into economy in many ways.
Because of stability and security we are sucking the wealth of the Earls as vacuum cleaner.

"There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." Hamlet
Hank
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5/21/2018  12:18 PM
I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

"It almost as if Bonn is relying on techniques he has learned for academic debates." "I can pay someone to find a statistic that will prove cloudy days cause stock market crashes." -Silverfuel
arkrud
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5/21/2018  1:21 PM
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Individuals defaulting on loans is personal issue for sure but not systemic issue.
This is simple math in use.
People with specific credit ratings are getting loans banks can get profits on on average.
At specific cut off red flags people just not getting loans.
The real estate crash was very well known overproduction crisis but this time in Real estate.
The overproduced inventory had to be destroyed or made his way to the consumers overtime.
This is the nature of capitalism. The best but not even close to perfect economical system we know.
Thousands years back the Slavery was the best economical system humans knew. Then it was outdated and gone.
We may be already in the beginning of new economical system but hundreds years will need to pass for humans to define it.

"There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." Hamlet
HofstraBBall
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5/21/2018  9:39 PM
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

Agree with troubleing signs. History always repeats itself and people have short memories. The high risk loans that caused the housing crash are still alive and well. The debt that got so may in trouble in the 90's is also alive and well. But you are mistaken if you think that "Dumb" people run this country. On the contrary, its very very smart people. Smart people that are really greedy and self promoting. The dumb people are the ones they feed on and count on to make even more money with. If it was not for the millions of dumb people in this country (Specially voters) the greedy and selfish would not prosper.

'Knicks focus should be on players that have grown up playing soccer or cricket' - Triplethreat 8/28/2020
meloshouldgo
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5/21/2018  10:28 PM
HofstraBBall wrote:
meloshouldgo wrote:
Gudris wrote:That military budget will kill USA some day, cut a military budget in half and give that money to create a modern education system, you need more smart people in a country.

I agree. But in a country run by dumb people, it's hard to make that case. That aside, the military budget isn't directly detrimental to the economy as it usually leads to a lot of manufacturing though heavily skewed to certain industries. The lack of focus on education is pervasive, since education is painted as a left wing entitlement. This is how screwed up our society is. For al the technology and the weaponry the we own it's a country where the media and the politicians keep moving us back to the dark ages. Instead of separation of church and state, it's going in the opposite direction. Violence is commonplace and supported by the NRA loving fukkfaces. And education is lampooned by the masses. 40% people read at a level equal to or below 4th. graders. Being stupid and living in bondage via instruments of debt, that's the REAL American dream.

Agree with troubleing signs. History always repeats itself and people have short memories. The high risk loans that caused the housing crash are still alive and well. The debt that got so may in trouble in the 90's is also alive and well. But you are mistaken if you think that "Dumb" people run this country. On the contrary, its very very smart people. Smart people that are really greedy and self promoting. The dumb people are the ones they feed on and count on to make even more money with. If it was not for the millions of dumb people in this country (Specially voters) the greedy and selfish would not prosper.

Greedy and smart are different things, nothing about Trump or most of congress inspires any confidence in their ability to process information and comprehend the global geopolitical situation or even what is happening at home. The smart people don't run the country they buy the dumb people that run the country by paying for them to get elected. Now, is congress and Trump smart enough to get rich from selling out the American people?Heck yes! But that's just self serving street smarts, it has nothing to do with intellectual capacity,integrity or commitment to any ideals of any kind. The reason why most financial regulations don't work is they get voted on and modified by people who have zero understanding of how derivatives work. There's alwasy going to be a handful of people who get it - but they can't act on it because their ideas must first be dragged down to the level of the lowest common denominator in congress before it can pass muster and become a law. That act by itself defeats the best poilicies by way of oversimplifying everything into a black and white partisan dogfight.

Look around you the dumb people are electing their own kind, and the smart people are fine with it.

As for the lowest common denominator - this is the type of thing I am talking about-
https://www.cnn.com/2018/05/17/politics/mo-brooks-nasa-climate-change/index.html?ofs=fbia

Example of how dumb people make laws and break old ones
https://www.huffingtonpost.com/michael-kieschnick/the-senate-almost-votes-t_b_608213.html

Selling out doesn't require brains, it only rquires greed and a lack of conscience. And I am by no mean thinking of Republicans only, both parties are culpable.

I cannot teach anybody anything. I can only try to make them think - Socrates
meloshouldgo
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5/21/2018  10:33 PM
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Interesting. do you have data on people with $100K degrees earning minimum wage? I would like to see that.

Borrowing money IS the norm, but has little to do with other countries. It became the norm because it is the central mechanism that drives the financial engine of this country. Our economy runs on debt. If people start paying the debt off ata massive rate, the whole economy will collapse. Borrowing is a problem because the people running teh economy want the population to be permanently saddled with debt. It's how they make money.

I cannot teach anybody anything. I can only try to make them think - Socrates
Hank
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5/22/2018  12:52 PM
I can't find any article any recent good articles at the moment, but below are good ones I could find.

FYI, China is one of the biggest holders of US and US corporate bonds, in reference to other countries lending money to US.

https://www.attn.com/stories/16099/how-pay-student-debt-minimum-wage-salary

"About 272,000 Americans who earned a Bachelor's degree or higher worked minimum wage jobs in 2015, according to the Bureau of Labor Statistics. That can make it more difficult to afford the basics — let alone pay off student loan debt. The average borrower graduated with $31,000 in student debt in 2015."



https://www.fastweb.com/financial-aid/articles/who-really-graduates-with-100-000-or-more-in-student-loans

A report, Who Graduates College with Six-Figure Student Loan Debt?, finds that only 0.2% of undergraduate students and 6.4% of graduate students graduated with $100,000 or more in student loans in 2007-08. Far from being the 99-percenters, these students are among the 1-percenters when it comes to student loan debt.

Graduate and professional students are more likely than undergraduate students to graduate with six-figure student loan debt. Among students graduating with six-figure student loan debt, 10% were undergraduate students and 90% were graduate and professional students. More than a third of law school graduates and almost half of medical school graduates graduated with six-figure student loan debt.


https://sputniknews.com/business/201703301052124100-us-college-grants-wage-jobs/

Graduates with social sciences majors earned about $41,000 per year on average in 2009, and $39,000 in 2015, while a graduate holding a major in law and public policy earned $39,000 in 2009, and only $33,000 in 2015. Liberal arts graduates were paid some $33,000 a year in 2009, and $32,000 in 2015, while architecture graduates earned some $59,000 in 2009, and $56,000 in 2015.

"It almost as if Bonn is relying on techniques he has learned for academic debates." "I can pay someone to find a statistic that will prove cloudy days cause stock market crashes." -Silverfuel
Hank
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5/22/2018  1:13 PM
meloshouldgo wrote:
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Interesting. do you have data on people with $100K degrees earning minimum wage? I would like to see that.

Borrowing money IS the norm, but has little to do with other countries. It became the norm because it is the central mechanism that drives the financial engine of this country. Our economy runs on debt. If people start paying the debt off ata massive rate, the whole economy will collapse. Borrowing is a problem because the people running teh economy want the population to be permanently saddled with debt. It's how they make money.

Being in debt is part of the US economy, but I wouldn't say businesses want Americans to be saddled in debt. It's more like a vicious cycle, consumers want to keep buying things they can't afford, and banks want to give these loans since it's profitable. No one is really paying attention to future consequences, which leads to a financial bubble and recession. I don' think regulation is going to help much, I think people/businesses will have to learn the hard way, which is to take the huge loss.

"It almost as if Bonn is relying on techniques he has learned for academic debates." "I can pay someone to find a statistic that will prove cloudy days cause stock market crashes." -Silverfuel
arkrud
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5/23/2018  8:16 AM
Hank wrote:
meloshouldgo wrote:
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Interesting. do you have data on people with $100K degrees earning minimum wage? I would like to see that.

Borrowing money IS the norm, but has little to do with other countries. It became the norm because it is the central mechanism that drives the financial engine of this country. Our economy runs on debt. If people start paying the debt off ata massive rate, the whole economy will collapse. Borrowing is a problem because the people running teh economy want the population to be permanently saddled with debt. It's how they make money.

Being in debt is part of the US economy, but I wouldn't say businesses want Americans to be saddled in debt. It's more like a vicious cycle, consumers want to keep buying things they can't afford, and banks want to give these loans since it's profitable. No one is really paying attention to future consequences, which leads to a financial bubble and recession. I don' think regulation is going to help much, I think people/businesses will have to learn the hard way, which is to take the huge loss.

We just had a huge bubble burst and recession in 2008.
Where are this all losers hiding? Looks like whoever was OK before is OK after.
And many are more that OK.
Who cares how wealth is accumulated in US as soon as it is accumulated.
We get more, World get less. And we have nuks and mighty military to protect it.
World of Man is not fair. And will never be.
So lets just enjoy what we have. Life is short.

"There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." Hamlet
meloshouldgo
Posts: 26565
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Joined: 5/3/2014
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5/23/2018  10:08 AM
Hank wrote:
meloshouldgo wrote:
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Interesting. do you have data on people with $100K degrees earning minimum wage? I would like to see that.

Borrowing money IS the norm, but has little to do with other countries. It became the norm because it is the central mechanism that drives the financial engine of this country. Our economy runs on debt. If people start paying the debt off ata massive rate, the whole economy will collapse. Borrowing is a problem because the people running teh economy want the population to be permanently saddled with debt. It's how they make money.

Being in debt is part of the US economy, but I wouldn't say businesses want Americans to be saddled in debt. It's more like a vicious cycle, consumers want to keep buying things they can't afford, and banks want to give these loans since it's profitable. No one is really paying attention to future consequences, which leads to a financial bubble and recession. I don' think regulation is going to help much, I think people/businesses will have to learn the hard way, which is to take the huge loss.

Yes always blame the consumers, this whole position is pure sophistry. Do you realize what will happen if the consumers exercised the restraint you advocate? This economy runs on debt driven asset valuations. Home prices would collapse, car companies would go bankrupt and all the industries that support personal consumption will grind to a halt. This is the economy you want?

We don't need regulations? So it's ok for people to be conned by lenders and lose their savings and their freedom? This is what you advocate? Screw the people so you can have your precious free market? Maybe it's time to reexamine those priorities?

I cannot teach anybody anything. I can only try to make them think - Socrates
Hank
Posts: 20109
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Joined: 7/1/2008
Member: #2082

5/23/2018  1:19 PM    LAST EDITED: 5/23/2018  1:21 PM
Consumers have the responsibility not to spend more money than they can afford. Very simple premise, and defining the loan limit of a consumer is the grey area. Are you implying consumers do not take some blame for their borrowing decisions? I understand lenders should apply prudence when lending money, but I believe consumers should assume some responsibility when taking a loan.

What do you propose on regulating consumers and lenders? How much a person can and should be able to borrow is up for debate. But as your initial post points out, credit card and car loans delinquency/default rates on the rise, meaning people are spending more than they can afford. Keep in mind, we are expected to have 3 interest rates hike this year, so loan delinquency rates will rise some more. So it is a worrisome trend, and any solution to the problem will hurt both borrowers and lenders. So, as to my point, a vicious cycle, where the lender and borrower both play a role in creating and popping the financial bubble.

There might be a better type of economy, but I am only really familiar with the US economy and capitalism. You may have thoughts on better types of economy, and I am willing to hear them out, but no need to bend my statements.

"It almost as if Bonn is relying on techniques he has learned for academic debates." "I can pay someone to find a statistic that will prove cloudy days cause stock market crashes." -Silverfuel
Hank
Posts: 20109
Alba Posts: 21
Joined: 7/1/2008
Member: #2082

5/23/2018  1:23 PM
arkrud wrote:
Hank wrote:
meloshouldgo wrote:
Hank wrote:I do believe there is too much easy credit in the United States. Real estate, education, cars won't be so expensive if there is more restrictions on borrowing money. Doesn't make sense to take 100,000-plus loan to bachelor's degree that most likely lead to minimum wage or unemployment. Same goes for buying more expensive homes and cars than you can afford. Over-borrowing is a common problem and pattern every decade, and will continue on until United States can no longer borrow money. This may may or may not happen in our lifetime, don't have any historical points for reference. It did take Roman Empire and China a few hundred years to collapse/rebuild. It took Greece a couple of decades to ask for a bail-out.

Borrowing money is the norm, and will continue to be the norm until U.S. can't borrow money from other countries, as in other countries are in recessions. Apparently, we are not close to our limit on borrowing money, but a recession might be coming if the default rates on loans keep going up. US economy can endure a lot of stress before imploding into a recession (could be mild or strong one).

Interesting. do you have data on people with $100K degrees earning minimum wage? I would like to see that.

Borrowing money IS the norm, but has little to do with other countries. It became the norm because it is the central mechanism that drives the financial engine of this country. Our economy runs on debt. If people start paying the debt off ata massive rate, the whole economy will collapse. Borrowing is a problem because the people running teh economy want the population to be permanently saddled with debt. It's how they make money.

Being in debt is part of the US economy, but I wouldn't say businesses want Americans to be saddled in debt. It's more like a vicious cycle, consumers want to keep buying things they can't afford, and banks want to give these loans since it's profitable. No one is really paying attention to future consequences, which leads to a financial bubble and recession. I don' think regulation is going to help much, I think people/businesses will have to learn the hard way, which is to take the huge loss.

We just had a huge bubble burst and recession in 2008.
Where are this all losers hiding? Looks like whoever was OK before is OK after.
And many are more that OK.
Who cares how wealth is accumulated in US as soon as it is accumulated.
We get more, World get less. And we have nuks and mighty military to protect it.
World of Man is not fair. And will never be.
So lets just enjoy what we have. Life is short.

Yes, people will adapt, move on, and will be fine. I am enjoying my life.

"It almost as if Bonn is relying on techniques he has learned for academic debates." "I can pay someone to find a statistic that will prove cloudy days cause stock market crashes." -Silverfuel
meloshouldgo
Posts: 26565
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Joined: 5/3/2014
Member: #5801

5/23/2018  6:29 PM
Hank wrote:Consumers have the responsibility not to spend more money than they can afford. Very simple premise, and defining the loan limit of a consumer is the grey area. Are you implying consumers do not take some blame for their borrowing decisions? I understand lenders should apply prudence when lending money, but I believe consumers should assume some responsibility when taking a loan.

What do you propose on regulating consumers and lenders? How much a person can and should be able to borrow is up for debate. But as your initial post points out, credit card and car loans delinquency/default rates on the rise, meaning people are spending more than they can afford. Keep in mind, we are expected to have 3 interest rates hike this year, so loan delinquency rates will rise some more. So it is a worrisome trend, and any solution to the problem will hurt both borrowers and lenders. So, as to my point, a vicious cycle, where the lender and borrower both play a role in creating and popping the financial bubble.

There might be a better type of economy, but I am only really familiar with the US economy and capitalism. You may have thoughts on better types of economy, and I am willing to hear them out, but no need to bend my statements.

Not trying to bend anything but I probably stereotyped you into something and I shouldn't have done that, as I don't know enought about you.

Nowehre have I said consumers should be blame free - in fact consumers are heavily penalized by these loans. When they are making payments they are living in excess stress because hey have borrowed what they can't afford. When the fail to make these payments their credit scores are damaged and tehy can't borrow again - hell tehy can't even find jobs at that point. The system to punish consumers for not fully understanding the implications of loans already exists.

I disagree with the premise that people are borrowing more than they can afford to but luxury items only - most of the people are borrowing to buy basic necessities and make ends meet. Look up payday lending scams that have preyed on the most vulnerable section of the population for years. Obama administration put regulations in to check predatory lending in this area. Trump and his groupie Mick Mulvaney just reversed those regulatons. The people whose only recourse to feeding their children and paying rent is payday loans don't need to learn lessons on borrowing they need a fightuing chance to live a life of decency that they are working for.

What you need to regulate is how banks target low income people to sell them loans - this is from quicken Loans website. They call this the guide to making good borrowing decisions -

Loan Type
A mortgage's type depends on if a government agency or private investors are involved, as well as the size of the loan.

FHA loans are the easiest to qualify for. They require a low down payment and credit score, but they can cost more over time because they require you to pay a fee called mortgage insurance. You can get an FHA loan from any FHA-approved lender. These loans are insured by the Federal Housing Administration (FHA), which just means that the FHA protects lenders against loss from homeowners who default on their loans. Learn more about FHA loans.

Conventional loans are a bit harder to qualify for, but they can cost less over time than an FHA loan. With a conventional loan, you can avoid paying private mortgage insurance if your down payment is 20% or more, which can save you hundreds of dollars on your monthly mortgage payment. Learn more about conventional loans.

VA loans are exclusively for veterans, eligible surviving spouses and active-duty service members. VA loans offer the opportunity to buy a home with no down payment or private mortgage insurance. Learn more about VA loans.

Jumbo loans are mortgages that exceed the conventional loan limit. This simply means that you'll need a jumbo mortgage if your loan amount is between $453,100 and $3 million. Learn more about Jumbo loans.

Right up front within the first two paragraphs they are telling people it's easy to get FHA loans with low down payments AND CREDIT SCORE and they the bank are protected from borrower defaults - do you see anybody protecting teh borrower in this equation? Then they clarify further that traditional loans are harder to get and if you are not a VA you are **** out of luck. What decision do you think this is driving towards? Quicken loans/Rocket Mortgage is probably the LEADING non bank lendder in the country right now. You can find examples like this any website you pull up.

I cannot teach anybody anything. I can only try to make them think - Socrates
OT: Some worrisome trends in the economy

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