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consumer distress

Started by Peter, July 30, 2017, 11:00:00 PM

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Unemployment at 4.3% but there is no job security. Net worth at record high but wages are stagnant. Majority of net worth is due to asset bubble (real estate/stocks). Anyone who borrowed based on the rising net worth  and steady employment is going to be in trouble when either their employment is in jeopardy or their net worth declined as asset bubble deflates.


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Here's some real "consumer distress" for you.  In the name of "helping", the solar power industry and contractors have gotten together and somehow talked a number of state governments (starting with California, go figure) into collecting "PACE" loans via property tax assessment:" class="bbc_link" target="_blank">
(Can we get the govt to turn p2p loans into undischargeable tax debt?)

What started out as just roofing loans for solar panel installation is now ballooning into government acting as collection agent for some private companies financing any work on a home.  "We're from the government - and we're here to help redo your kitchen and baths!" -Ronald Reagan

I am sure that the people who came up with it feel like they've helped...

That's what's important - to feed one's saviour complex, damn the cost!

ETA:  Oh, I missed the 2nd part of the article:" class="bbc_link" target="_blank">



Notice that the chart in the business insider article has separate curves for different card cmopanies.  Cap One looks much different than Amex.  Its a good reminder how different groups of consumers behave differently, and why much of the aggregate (US Govt) data doesn't show a problem.


What is not surprising is how these cards are used. Synchrony is mainly store cards, if I have that right, and AMEX would be an everyday card. AMEX also has pretty tough standards on FICO score approval. I do find it odd that Discover is quite low. I figured that they are easier to get would lead to a higher default rate.
Is this a turn for the economy or just a statistical outlier?"> from: Fred93 on June 12, 2017, 01:34:24 AM


From the QZ article:

"Sacerdote's paper begins by showing that, for a variety of goods, US household consumption increased despite stagnant wages."

Well, consumption can indeed increase in light of stagnant wages if debt loads are increasing too. Isn't that what we are seeing? This QZ article seems to skirt the debt issue. If people are funding consumption and an increase in quality of living on increasing debt without a commensurate rise in wages, eventually we are in for a correction and it will end in tears. Defaults will happen, creditors will get stiffed (and P2P lenders), and a retrenchment will ensue.

I am an RN at a major hospital in Southern Utah, about 1 1/2 hour away from Vegas. I've seen enough anecdotal evidence among the extremely wide variety of patients I take care of to tell me that things are not good.  I live in one of the best economies in the nation, and everywhere I go I see young couples vastly overextending themselves. I remember going on a run the other day and talking with a guy who was in the process of buying a $500k house. This guy was a shuttle driver, probably making no more than $20/hr. The other "ah ha" moment I had which made me sour on the expansion was when I read Matt Levine's blurb about "puppy leasing."




Bloomberg's Matt Levine wrote a blurb in his "Money Stuff" blog today on LC and Prosper:



I've seen one version or another of that story at least 20 times in the last 10 years, each time some journo "discovers" how lending works.

Anyway, back to wondering how I feel about Amazon's move into food distribution - and whether I think they've crossed one line too many.

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