Credit Card Addicted Nation: How Americans have Pushed Themselves off the Fiscal Cliff. $931 Billion in Credit Card Debt Outstanding.
Credit cards were developed as a form of convenience and not another stream of household income. The first major use in the United States started in the 1920s when it was used for the purposes of fueling the expanding auto owner population. Bank of America created the BankAmericard in 1958 which later became the Visa system. If we rewind to the start of the decade, let us use January 2000 as the date, Americans had $614 billion in credit card debt. Today that number now stands at $931 billion. Now this wouldn’t be such an issue if real wages and savings had increased over this timeframe but the reality is, Americans used over $300 billion in credit card debt to maintain a lifestyle beyond their means. Much of this came in conjunctions with the housing bubble which took three decades to expand.
The Country that Punishes Savers: Americans Saving 7 percent of Income Putting nearly $800 Billion Annual Rate on the Sidelines. Banks offering 0 to 0.10 Percent to Borrow Your Money.
Americans are increasingly putting more and more money on the sidelines. For the month of May Americans put away 6.9 percent of their income into savings. Not the stock market or real estate but bona fide savings. This is a stark contrast from the zero rates achieved back in April of 2008. When we discussed the new austerity for Americans, much of this is being driven by the loss of jobs and the fact that nearly 26,000,000 Americans are unemployed or underemployed. Now why are Americans suddenly finding the need to save some money? First, the decade long housing bubble has shattered the notion that phantom equity is the same as actual wealth. The next major issue is the stock market is no longer seen as a safe investment. Even if someone had his or her funds in the S&P 500 the index is still down approximately 40 percent and that is after the major rally since the March low.
$100,000 a Year Will Make you Go Broke with the California Tax System: Why California is a Fiscal Disaster. Broken Tax Structure built on Bubbles.
It is amazing how little attention on a national scale the California debacle is getting. California alone is the 8th largest economy in the world and contributes $1.8 trillion a year to the national GDP. In the mainstream press, all you hear is sound bites of “there goes California” yet the state is teetering on economic insolvency. The U.S. Treasury and Federal Reserve seem more concerned about shoring up a situation where the U.S. dollar collapses instead of focusing on systematically changing the problems that have driven our economy to the cliff. California is a perfect example of how not to finance a state economy. I know many people out of state have a hard time understanding how $100,000 a year can make you feel broke in this state but after reading this article, you will understand why. Keep in mind, you can live here on a $46,000 a year budget but that is now going to become harder and harder given this crisis.
California Foreclosure Prevention Act: Creating an Army of Lifetime Renters in California.
On June 15th California implemented another foreclosure moratorium. The California Foreclosure Prevention Act (CFPA) was signed into law by Governor Schwarzenegger which adds another 90 days to the foreclosure process. If you recall, a similar law was put into place in 2008 and turned out to be an utter failure. So what do we do? We virtually create another replica plan for a second go around. The plan will fail on so many levels and we will discuss the reasons why in this article. California has taken a major beating since it was part of the housing bubble mania and is now at the forefront of the bubble bursting.