For those who believe the economy is recovering, I submit the following information sent by reader EBW:
When we looked at the latest release of consumer debt a few days ago, we spread the data into its constituentgovernment and non-government loans.
Needless to say, taking away the “government” means consumer credit has imploded.
So where does all this government debt go?
Two places:
1. car financing (car sales jump on a spike in car sales to subprime buyers; i.e., Government Motors clients),
2 and student loans.
The chart from Zerohedge.
Some may see these data as “government doing its job.” supplementing private credit markets with public credit. This is a false notion as the following points should convey:
- We are in a debt depression. By that, we have too much debt and much of it must be liquidated. That is exactly what consumers and markets are attempting to do.
- The car loans are sub-prime. That means the marketplace would not, by itself, make these loans. The customers are not creditworthy enough. This credit intervention is the same that brought us sub-prime mortgages and the housing crisis (which still is long from over).
- Government Motors (GM) is being subsidized by you so that government does not have to own up to the mistake it made by bailing them out. You are being forced to make loans that rational lenders would not.
- Citizens who did not invest directly in GM have lost $16.5 billion as a result of government investment. Those who purchased shares when the company came public lost substantially more. Compare that with Solyndra where $0.5 billion was lost. You probably didn’t invest in either company, or at least think you didn’t. Yet we did via government force. Their mistakes become our bad debts via deficits and government debt. Ultimately it is us who will pay for this nonsense.
- Student loans are little different from sub-prime loans. College costs have increased beyond the point where it is economical to go to many colleges, especially in this economy. Government is making debt slaves out of students who believe a college education is “worth it.”
Higher education is in just as big a bubble as was the housing market. From the metrics, one can argue that it is even more unsustainable than housing at its peak. It will burst with the same devastating consequences. Aspiring entrepreneurs should begin to think about what thousands of abandoned classroom and dormitory buildings can be converted to. They will be dirt cheap.
We are witnessing the death spasms of a once-great economy. Government is doing its best to hide this condition by continuing to squander your resources. These actions are not to protect you, but to protect the politicians for the ending that lies ahead. We are almost out of time and resources. The game is almost over.
The OccupyX demonstrators sense something is wrong. Many of them are student loan debt slaves already with no job prospects. Too many of them have been indoctrinated to believe that bigger government is always the solution. It was a solution only in the sense that more alcohol “cures” a hangover. That prescription results in the death of an alcoholic or an economy.
We live in interesting times. They are about to become more interesting. Everyone around the world is angry. Most don’t understand what is happening to them, but they want it fixed. Interesting times will likely turn into dangerous times.
