UPDATE:
This post has been updated to reflect errors by yours truly. Changes are shown in italics. Deletions are struck through with a solid black line. My apologies for the mistakes.
Steven D
*******
We’ve been in a “trickle-down” mode with respect to economic policy since the Reagan era. What has it gotten us? Income inequality, say liberals and progressives, but what does that buzzword mean in real terms? It’s easy to say that wage growth has essentially stalled or reversed course for the poor and middle classes over the last 40 years, but that statistic is hard to grasp. It’s difficult to look at aggregate numbers and get any real sense of the economic damage done to most people by neo-liberalism and its adherents in both parties have wrought.
But here is one statistic that should shock people: The average (not the median) amount of credit card debt for indebted American families stands at $15,000.
As the economy improves, more Americans are borrowing money to pay for purchases.
Thirty-seven percent have credit card debt that equals or is greater than their emergency savings, says a survey released today by Bankrate.com.
“These numbers mean that three out of every eight Americans are teetering on the edge of financial disaster,” says Bankrate’s Greg McBride.
The average credit card debt for U.S. households is more than $15,000, according to the Federal Reserve.
So, over a third of Americans have more credit card debt (not all debt, just what they owe on their credit cards) than their savings. The average amount of credit card debt of for US consumer households that carry debt and this includes as of the US Census, 69% of all US households everyone: rich, poor or somewhere in the middle of those two extremes is FIFTEEN FREAKING THOUSAND DOLLARS! Here’s how the numbers break out from 2010:
In March 2010, the last date at which the data can be reliably estimated, we found that:
The median American household owed $3,300 of consumer debt;
The average American household owed $7,768 and
The average indebted American household owed $17,630.
And from 2014 as to all household consumer debt:
U.S. household consumer debt profile:
Average credit card debt: $15,611
Average mortgage debt: $155,192
Average student loan debt: $32,264
Hell, the total personal debt Americans owe is in excess of ELEVEN TRILLION FREAKING DOLLARS!
Which is a sign the majority of middle class and below people are not in a good situation when it comes to saving for their retirement, their children’s education, or just a rainy day. And what advice to accounts and financial advisers have for these people?
“From a purely financial standpoint, it makes more sense to pay down that high interest rate” before you start to save, says Kelley Long, member of the American Institute of CPAs.
Borrowing money with a credit card is usually very expensive.
Well, duh. Except what do you do when you can’t pay your rent or your mortgage and still feed your kids? What happens when you can’t afford to pay your medical expenses if you have a high deductible policy, unless you use credit cards (or dip into whatever IRA or 401K savings you might have – at a significant penalty for doing so I might add)? What happens when that company you joined suddenly goes belly-up, or worse, decides to improve it stock price by lowering its expenses by firing a significant number of its workers, including you, Mr. or Ms. USA? How do you pay down your credit card debt then?
By the way, guess who is using all this consumer credit card debt to create more derivatives. Would it surprise you if I said the usual suspects?
The world’s total notional value of derivatives contracts was around $500 trillion prior to the financial crisis in 2007, a number which has since gone up to a staggering $710 trillion according to the BIS.
A recent survey of this derivatives minefield looks something like this:
Five banks in the US account for over 90% of all US outstanding derivative exposure – the same usual suspects of too-big-to-fail (TBTF) banks which all blew up and had to be subsequently bailed out in 2008. Each one carries more than $40 trillion in derivative exposure.
I suppose we should just trust them not to screw up the world economy like the last time, because obviously they clearly learned their lesson, right? Well, not exactly.
Banks are lending to companies and individuals at the fastest pace since the financial crisis, helping propel profits to near-record levels.
U.S. banks posted $40.24 billion in net income during the second quarter, the industry’s second-highest profit total in at least 23 years, according to data from research firm SNL Financial. The latest profits are just below the record $40.36 billion recorded in the first quarter of 2013. […]
Banks set aside less money to cover soured loans, helping to boost profits. At the same time, overall loan growth increased at its fastest quarterly pace since the financial crisis, topping $8 trillion in total loans outstanding for the first time since SNL began tracking the data in 1991.
Gee, ain’t that just peachy. Too bad the “We the people” aren’t considered too big to fail. On the contrary, considering our politics, it seems we will never be important enough not to be given the short end of the economic stick. In short, we are almost always allowed to fail, and the only question these days seems to be how much should we be made suffer for the mistakes of our betters.
