Sunday, May 11, 2014

THE PHANTOM RECOVERY

Is going deeper into debt a sign that the economy is recovering or in relapse?

Americans are again huffing and puffing and blowing up the next balloon that will inevitably explode one more time and throw the country back into another financial crisis.

There's no stopping them. Like Lemmings racing towards the cliff consumers will once again prove that insanity is continuing to do the same thing over and over again and expecting different results.

There was a time when buying on credit was for sensible reasons; a home, a new car, r some other big ticket item that would be impossible for the average American to plunk down the cash for. That's something only a privileged few (the 1%) can indulge in.

Credit in these times; like many other aspects of life in America, has become addictive. The more the better. Going to a movie, buying a hamburger, or a pair of jeans.  No problem. When the balance get's up there you can just apply for another card and transfer it.

Are consumers just plain dumb or not paying attention? Are the banks so slick they can slip all those fees and interest charges in there without anyone noticing? Do consumers realize they are paying more for what they buy when they do it on credit? Sometimes as much as 20% more on cards doled out to those who can't afford to even have credit let alone be issued a credit card that will eventually come back to haunt them.

Consumer Credit Balances Jump

Consumer credit balances increased by $17.5 billion in March to a total of $3.141 trillion. The gain was a bigger increase than the $15.5 billion expected by economists.

This was the biggest month-over-month growth rate since February 2013, reports Bloomberg.

Nonrevolving debt like college and auto loans grew by $16.4 billion.

Revolving debt like credit cards increased by $1.1 billion.