Subprime lending at highest level since financial crisis hit: The three leading subprime categories are auto loans, credit cards, and student debt. $189 billion in subprime loans made in 2014.
The euphoria is bleeding into every corner of our debt driven economy. Access to credit is being given to consumers but unfortunately, the loans are tied to items that are counter to becoming financially healthy. More to the point, subprime loans have reached levels that were last seen only during the financial crisis. As fewer good borrowers are available, lenders are digging into every nook and cranny of the economy to find additional borrowers. Money is brought into existence through debt. People have a hard time wrapping their mind around this. For example, say you are a student looking at going to college but have zero dollars to pay for it. A lender will pay for your school and create this “money†out of thin air. How so? All of a sudden you graduate and now owe $50,000 for example. You will need to pay this back with real earned income for many years. This is money that was brought into the system from financial institutions and we are now seeing it permeate into auto loans and credit cards with subprime borrowers. In 2014 $189 billion in subprime loans were made. Welcome back to the easy debt party.
The revival of the American debt machine: auto loans, student debt, and credit card debt surge in latest report. Total non-housing debt now at $3.15 trillion.
Last week while going through mountains of credit cards offers, it felt as if we were in 2005 and 2006. Even last year, the cold calls started and it seemed like the debt machine was back and alive. This is helpful news for consumers given that half of Americans are living paycheck to paycheck. Now that the bailouts have aided the very small portion of financially connected, it is time to shower the public with auto debt, credit card debt, and student loan debt to get the party fully going. I’ve covered over the last few quarters the surge in subprime auto debt since practically all Americans have some sort of auto debt. With all those with OK credit being tapped out, it was time to search for a wider market. The last quarter saw auto debt go up by $21 billion, student debt by $31 billion, and credit card debt by $20 billion. Non-housing debt continues to make new highs while housing debt is still off the peak since big banks and investors now own a good number of single family homes. The debt machine is back on.
A demographic tsunami looms: By 2020 we will have 20 percent of our population 65 and older. Half of elderly Americans would be in financial ruin if it weren’t for Social Security.
Kicking the can down the road has a nice appeal. It is the same allure that comes from procrastinating. Putting off the dirty work for another day. This seems to be the approach we have taken for deficit spending. So it is no surprise that older Americans have followed in the same footsteps and many did not prepare for retirement. It is startling to realize that over half of elderly Americans rely on Social Security for most of their income in retirement. We also know that over the next decade the percent of Americans aged 65 and older is going to boom. So this trend of financially living on the edge is going to be troublesome. Younger American workers are having a tough time in the current economy so it isn’t realistic to have this group support the incredibly large number of retirees. So what are we doing? Just ignoring the issue for another day. We are heading to some challenging times and many older Americans are simply not prepared for retirement.
Top 4 largest occupation sectors in the United States all in the low wage service sector paying $10 an hour or less: What does it mean living near the minimum wage?
People have a hard time wrapping their minds around the economic fact that the top employment sectors in the United States are all made up of occupations in the low wage service sector. We define low wage as a job that pays $10 an hour or less. The press doesn’t really highlight this working poor segment of our society even though a large percentage of our population is employed in an industry that pays very little and offers scant benefits (if any). There was a time when the top employment sectors in the US involved people making things and wages provided enough for a healthy standard of living. Now most Americans need to go into incredible levels of debt to purchase homes or even go to college. I always find it useful to look at the top employment sectors in our country because it gives us a good sense as to what jobs are dominating the market. Let us take a look at some of the top employment fields.