Then too, there's this from Dailyfinance.com:
"The New York Stock Exchange released data showing that margin credit -- money investors borrow to buy shares -- increased to $276 billion in December, up from $233 billion at the start of the year. That reflects a sharply higher stock market but also an increased appetite for borrowing." ("With Consumer Credit Up Sharply, Is America Releveraging?" -- Dailyfinance.com)
Please recall that it was the ever growing amount of borrowing to buy stocks in 1929 that led to the crash that year.
Yowsa, it's bubble-time once again. Everyone is borrowing to the hilt so that everyone can keep spending to the hilt. But you're probably wondering how consumer credit can expand when households and consumers got whacked for $11.4 trillion in the meltdown, and their ratio of debt-to-disposable income is still way above normal? Well, just go to Google News and take a peak at all the zero-down intro offers on auto loans. Virtually anyone can buy a new car these days. Bad credit? Pay a lawyer to clean it up. So, we're back to Square 1 -- selling products to people with shaky credit who can't come up with a few hundred bucks for a down payment. Credit expansion is easy when you offer people something for nothing. It's getting repaid that's hard.
The other big area of bubblenomics credit expansion is student loans, the government-backed scam of the century. The banksters have figured out how easy it is to swindle college kids with promises of hefty 6-figure salaries when they finish their 5-year stint at the for-profit Bunko University. Of course, when they finally do graduate, drowning in red ink, they will discover that their job has been outsourced to Bangalore and they're left with the prospect of either taking a "McJob" or moving back in with mom and dad. Here's the way student loan expert Alan Nasser lays it out:
"The student loan industry is huge. It was announced last summer that total student loan debt, at $830 billion, now exceeds total US credit card debt, which is itself bloated to the bubble level of $827 billion. And student loan debt is growing at the rate of $90 billion a year....It estimated that over their lifetime, between 19 and 31% of college freshmen and sophomores will default on their loans (depending on the type of loan and when it was taken on). For community college students, the prospects were grimmer still: between 30 and 42% were expected to default. And the future was most discouraging for students at for-profit colleges: between 38 and 51% were expected to default."
This is called bubble bursting. Some of these turkeys will default at a rate of 51% and yet we are allowing this swindle to continue?!? Remember, even at the height of the housing bust, the subprimes only defaulted at a 20% rate. Student loans are much worse. Our kids are taking not a haircut but a sheep-sheering. Why? So that Wall Street can lavishly pad the bottom line...and no member of Congress seems to give a damn!
So, will the banks loose big-time on this risky gamble? Of course not; they will be bailed out by the US taxpayer because they are once again "too big to fail." ("Dat's a nice economy ya got dere, fella. It'd be too bad if it all fell apart. So gim-me da money and we'll keep it all togedder for ya, okay?")
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