Title: consumer distress
Post by: Fred93 on June 02, 2017, 11:00:00 PM
Post by: Fred93 on June 02, 2017, 11:00:00 PM
Article in Barrons today.
http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
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http://www.barrons.com/articles/the-surprising-threat-to-the-american-economy-1496463255?mod=BOL_twm_ls&tesla=y
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Title: consumer distress
Post by: AnilG on June 02, 2017, 11:00:00 PM
Post by: AnilG on June 02, 2017, 11:00:00 PM
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.
Title: consumer distress
Post by: Rob L on June 03, 2017, 11:00:00 PM
Post by: Rob L on June 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: rawraw on June 03, 2017, 11:00:00 PM
Post by: rawraw on June 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on June 03, 2017, 11:00:00 PM
Post by: TravelingPennies on June 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: Peter on June 03, 2017, 11:00:00 PM
Post by: Peter on June 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on June 03, 2017, 11:00:00 PM
Post by: TravelingPennies on June 03, 2017, 11:00:00 PM
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:
http://www.latimes.com/business/la-fi-pace-loans-20170604-story.html
(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: http://www.latimes.com/business/la-fi-pace-reforms-20170604-story.html
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http://www.latimes.com/business/la-fi-pace-loans-20170604-story.html
(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: http://www.latimes.com/business/la-fi-pace-reforms-20170604-story.html
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Title: consumer distress
Post by: investny on June 11, 2017, 11:00:00 PM
Post by: investny on June 11, 2017, 11:00:00 PM
Credit cards defaults are up
http://www.businessinsider.com/credit-card-defaults-have-spiked-as-lending-standards-fall-2017-6?utm_source=PeerIQ+Weekly+Market+Update&utm_campaign=fb6a8e9716-EMAIL_CAMPAIGN_2017_06_11&utm_medium=email&utm_term=0_1a3ccbed26-fb6a8e9716-157393997
http://www.businessinsider.com/credit-card-defaults-have-spiked-as-lending-standards-fall-2017-6?utm_source=PeerIQ+Weekly+Market+Update&utm_campaign=fb6a8e9716-EMAIL_CAMPAIGN_2017_06_11&utm_medium=email&utm_term=0_1a3ccbed26-fb6a8e9716-157393997
Title: consumer distress
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
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.
Title: consumer distress
Post by: fliphusker on June 11, 2017, 11:00:00 PM
Post by: fliphusker on June 11, 2017, 11:00:00 PM
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
Is this a turn for the economy or just a statistical outlier?
from: Fred93 on June 12, 2017, 01:34:24 AM
Title: consumer distress
Post by: SLCPaladin on June 11, 2017, 11:00:00 PM
Post by: SLCPaladin on June 11, 2017, 11:00:00 PM
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."
"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."
Title: consumer distress
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
Post by: TravelingPennies on June 11, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on June 14, 2017, 11:00:00 PM
Post by: TravelingPennies on June 14, 2017, 11:00:00 PM
Bloomberg's Matt Levine wrote a blurb in his "Money Stuff" blog today on LC and Prosper:
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Title: consumer distress
Post by: TravelingPennies on June 15, 2017, 11:00:00 PM
Post by: TravelingPennies on June 15, 2017, 11:00:00 PM
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.
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.
Title: consumer distress
Post by: Rude Dude on July 30, 2017, 11:00:00 PM
Post by: Rude Dude on July 30, 2017, 11:00:00 PM
Title: consumer distress
Post by: Peter on July 30, 2017, 11:00:00 PM
Post by: Peter on July 30, 2017, 11:00:00 PM
When chargeoffs rise, so, too, should interest rates. This is what I see happening, even though I don't interpret it the way Pomboy does - she probably takes her car into the shop and says "it's firing on all cylinders and the timing and alignment are in near dead-sync --- pls fix!"
Oh, who are we kidding... she probably only rides in black cars. That quote about her being "distressed" that chargeoffs are rising despite record low interest rates tells me exactly to which school of economics she subscribes. To anyone without a Patrice Lumumba doctorate, a slight renormalization/rise in chargeoffs, after a massive recessionary rescue, just means that things are going swimmingly, and to tighten.
Oh, who are we kidding... she probably only rides in black cars. That quote about her being "distressed" that chargeoffs are rising despite record low interest rates tells me exactly to which school of economics she subscribes. To anyone without a Patrice Lumumba doctorate, a slight renormalization/rise in chargeoffs, after a massive recessionary rescue, just means that things are going swimmingly, and to tighten.
Title: consumer distress
Post by: AnilG on July 30, 2017, 11:00:00 PM
Post by: AnilG on July 30, 2017, 11:00:00 PM
Chargeoffs rise when interest rates rise making existing floating rate loans such as credit card unaffordable. As an investor you should expect higher interest rate to compensate for higher Chargeoffs but as an existing borrower higher interest rate may be the death knell.
from: nonattender on July 31, 2017, 02:36:31 PM
from: nonattender on July 31, 2017, 02:36:31 PM
Title: consumer distress
Post by: TravelingPennies on July 30, 2017, 11:00:00 PM
Post by: TravelingPennies on July 30, 2017, 11:00:00 PM
Ergo, tighten up loose policy - stay with (or ahead of) the curve - and stop borrowers from digging in so deep at artificially low rates... 
I think you and I are saying the same things - though from a variety of angles... Wrt the Pomboy talk, I was talking macroeconomically.
from: AnilG on July 31, 2017, 04:02:45 PM
I think you and I are saying the same things - though from a variety of angles... Wrt the Pomboy talk, I was talking macroeconomically.
from: AnilG on July 31, 2017, 04:02:45 PM
Title: consumer distress
Post by: SLCPaladin on July 30, 2017, 11:00:00 PM
Post by: SLCPaladin on July 30, 2017, 11:00:00 PM
Title: consumer distress
Post by: Rob L on July 31, 2017, 11:00:00 PM
Post by: Rob L on July 31, 2017, 11:00:00 PM
Title: consumer distress
Post by: rawraw on July 31, 2017, 11:00:00 PM
Post by: rawraw on July 31, 2017, 11:00:00 PM
Yeah not sure how LC will compete on costs.
Title: consumer distress
Post by: TravelingPennies on July 31, 2017, 11:00:00 PM
Post by: TravelingPennies on July 31, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
You can't avoid credit cycles. If you are in this thinking you can, you need to be investing in US Treasuries
Sent from my SAMSUNG-SM-G935A using Tapatalk
Sent from my SAMSUNG-SM-G935A using Tapatalk
Title: consumer distress
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Post by: TravelingPennies on August 03, 2017, 11:00:00 PM
Title: consumer distress
Post by: TravelingPennies on August 13, 2017, 11:00:00 PM
Post by: TravelingPennies on August 13, 2017, 11:00:00 PM