from WallStForMainSt:
Household Debt At Record Level – Bigger Than China’s GDP
by Dave Kranzler, Investment Research Dynamics:
The economy continues to grow weaker despite all of the Fed, Wall St. and media propaganda to the contrary. The economy is growing weaker due to the deteriorating financial condition of the consumer, which is by far the biggest driver of GDP in the United States. The only way the policy-makers can avoid a systemic collapse is “helicopter” money printing, in which printed cash or digital currency credits is, in some manner, distributed to the populace.
The Fed reported that non-revolving consumer debt (not including mortgage debt) hit $2.6 trillion at the end of the first quarter. Student loans outstanding hit a record $1.44 trillion. Recall that at least 40{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of this debt is in some form of delinquency, default or “approved” non-pay status. Auto loans hit a record $1.2 trillion. Of this, at the very least 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} is subprime. A meaningful portion of the auto debt is of such poor credit quality when it’s issued that it is not even rated. Credit card debt is now over $1 trillion dollars and at a record level. The average outstanding balance per capita is $9600 per card for those who don’t pay in full at the end of the month. Just counting the households with credit card debt balances, the average balance per household is $16,000. The average household auto loan balance for all households with a car loan is over $29,000.
The data shows a consumer that is buried in debt and will likely begin to default at an accelerating rate this year. In fact, I’d call these statistics an impending economic and financial disaster. Credit card companies are already warning about credit charge-offs. Synchrony (which issues credit cards for Amazon and Walmart) reported that its credit card charge-offs would rise at least 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in 2017. Capital One (Question: “What’s in your wallet?” – Answer: “Not money”) reported that credit card charge-offs soared 28{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year over year for Q1. Synchrony, Capital One and Discover combined increased their Q1 provision for bad loans by 36{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} over last year’s provisions taken.
The monthly consumer credit report last week showed a $12.4 billion increase over May. A $16 billion increase was expected by Wall St. Keep in mind that every month of credit expansion is another new all-time high in consumer debt. Credit card debt outstanding increased by $4.1 billion, which is troubling for two reasons. First, it’s likely that financial firms are lending to less than qualified borrowers, as evidenced by the rising credit card delinquency and charge-off rates. Second, given the declining household real disposable income and savings rate, it’s likely that households are using credit card debt to pay for non-discretionary expenses. The smaller than expected increase in credit is being attributed primarily to slower growth in auto loans.
Speaking of the auto industry, Bloomberg reported last week that auto dealers, in a desperate bid to increase sales and reduce inventory, cut prices on new cars and trucks in July by the most since March 2009. It also reported that used car prices dropped 4.1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. This graph from Meridian Macro Research captures the rapid deterioration auto sales (click to enlarge):4
The chart shows rate of change in motor vehicle freight carload volume on a year over year basis vs. per capita auto sales. As you can see, the last time these two metrics were showing negative growth (a decline) and heading lower was 2008. The entire “boom” in auto sales since the “cash for clunkers” program, which ran from July 2009 to November 2009, has been artificially created by a massive expansion in Government-enabled credit and Fed money printing. The impending crash in the auto industry is unavoidable unless the Government resorts to outright “helicopter” money printing (i.e. giving cash directly to households rather than to the banks).
One of the best barometers of consumer financial health is restaurant sales, which are entirely dependent on the relative level of household disposable income that can be allocated to non-discretionary expenditures. Black Box Intelligence’s monthly restaurant industry snapshot, released Thursday, showed another monthly decline in restaurant sales and traffic – this one steeper than the past couple of months. I believe this is the 17th successive monthly year-over-year decline. Comp sales (year over year for July) were down 2.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} and comp traffic dropped 4.7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. The latter is more significant, as it better represents actual sales volume because dollar sales are boosted by price inflation. In contrast to these Real World numbers, the BLS reported in its employment report for July that the restaurant industry created 57,000 new jobs. This is not just flagrant misrepresentation of reality for propaganda purposes, it’s outright fraud.
Read More @ InvestmentResearchDynamics.com
Insane Home Prices in Silicon Valley & San Francisco Trip Up Jobs Growth
by Wolf Richter, Wolf Street:
Bay Area housing affordability nightmare hits home, so to speak.
What happens in a large urban market when a young couple with a household income that is far above median cannot afford to buy even a modest home? What happens to that local economy? That’s what everyone wants to know, because this is precisely the fate San Francisco, Silicon Valley, and surrounding Bay Area counties are contemplating.
The Housing Affordability Index (HAI), released by the California Association of Realtors (CAR), has some bad news for these people – and possibly for the trends in the local economy and the housing market.
The median price – 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} cost more, 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} cost less – in San Francisco of a single-family house hit $1.45 million in Q2, according to CAR. This does not include condos, whose prices are somewhat less deadly. It puts San Francisco in second place in the Bay Area, behind San Mateo County, which comprises the northern part of Silicon Valley. Santa Clara County, in fourth place, comprises the southern part of Silicon Valley. In third place is Marin County, just north of the Golden Gate Bridge:
The HAI measures affordability based on this median price of a single-family house (not condo) by county. It figures mortgage payments based on a composite of national effective fixed and adjustable mortgage rates to finance 80{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the price of the home.
The remaining 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} would be that elusive down-payment – elusive because for a median home in the counties of San Francisco or San Mateo, that down-payment would be nearly $300,000. If you live in an expensive city, it’s devilishly hard to save $300,000. So generally, forget that 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} down-payment. Maybe go for a 3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} down-payment ($43,000). In other words, realistically, the payments are going to be much higher and affordability even lower.
After assuming the existence of that 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} down-payment, the HAI then figures the monthly burden of owning that home: the mortgage payment, property taxes, and insurance. It does not include the tax effects of the mortgage interest deduction.
Given historically low mortgage rates – 30-year fixed-rate mortgages are still quoted under 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} – and that elusive 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} down-payment, the minimum qualifying household income needed to buy a median home in the counties of San Mateo and San Francisco would be nearly $300,000 per year:
The report also points out that these minimum qualifying income levels have about doubled for most of these counties since Q1 2012.
Read More @ WolfStreet.com
Money Laundering Scandal at Australia’s Largest Bank Triggers Another Call for Ban of Cash
by Mish Shedlock, Mish Talk:
Ian Narev, the CEO of Commonwealth Bank of Australia (CBA), the nation’s largest bank is set to step down amid money laundering charges.
Money laundering is big business in Australia because regulations do not cover lawyers, real estate agents, accountants, and CEOs ignoring warnings from police.
Despite the obvious problem, it’s cash itself that gets the blame.
There are several stories here buts let’s start with Australia’s Biggest Bank Says CEO Will Retire Amid Money-Laundering Scandal.
Commonwealth Bank of Australia Chief Executive Officer Ian Narev will step down by the end of June 2018 as the nation’s largest lender seeks to mitigate the fallout from a money-laundering scandal.
Pressure is building on Commonwealth Bank amid allegations by the nation’s financial crimes agency that drug syndicates used its network of deposit machines to launder cash, despite warnings from police. The nation’s securities regulator opened its own inquiry last week and the governor of the central bank called for accountability in the banking industry, which is beset by a string of scandals.
Narev, 50, has presided over a market-topping stock price since he took the helm at the start of December 2011. Last week, he delivered the lender’s eighth consecutive record profit.
His achievements have been overshadowed by the money-laundering allegations — the third major public-relations scandal he has faced as CEO. The bank has paid A$29 million ($23 million) in compensation to customers who were allegedly given poor financial advice, and has faced accusations it wrongly failed to honor insurance claims to sick clients.
The financial crime agency, Austrac, alleges that Commonwealth Bank failed to report either on time or at all suspicious transactions through its network of automated cash deposit machines totaling more than A$624 million, and it failed to monitor the activities of drug syndicates even after being alerted by police. The bank has blamed most of the breaches on a software coding error which has since been fixed.
The allegations are the latest in a series of scandals in Australia’s banking industry, ranging from giving poor advice to wealth-management customers to allegations the nation’s three other biggest banks manipulated a benchmark swap rate.
Moral of the Story
With share prices high after three scandals, the moral of the story must be CEO crimes pay. What other lesson could there possibly be?
Australia a ‘Place of Choice’ for Money Laundering
Please consider Australia a ‘place of choice’ for money laundering due to lack of regulation.
Australia’s hot property market is an attractive haven for criminals, with estimates that billions of dollars of dirty money is being laundered through residential property.
Australia’s anti-money laundering law does not cover real estate agents, lawyers and accountants, despite promises when the law was enacted in 2006 that the legislation would be widened.
ANZ’s head of financial crime, Guy Boyd, is scathing of the failure of subsequent governments to extend the legislation.
Australia’s housing market has been targeted by money launderers from countries including Papua New Guinea, Malaysia and China.
Read More @ MishTalk.com
SDR, Assimilation and Crushing the Banksters
from The Daily Coin:
Editors Note – The real “meat of the matter” lies within the supporting articles, documents and interviews that are hyperlinked throughout this article and the articles linked are loaded with additional hyperlinks. I would encourage the use of all links.
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As a lot of you know, Lynette Zang has been under fire after the interview with SGTReport about the ACChain being tied to the SDR. There have been several people to argue that she is 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} wrong and made videos showing what an SDR is, “calling the IMF”, having roundtable discussions and a variety of other attacks from former hard asset community members turned digital profiteers. The question I have is this – when was the last time a policy, bill or law was implemented then shelved and never used for it’s intended purpose? How many of these people have discussed the SDR with the Chief of the SDR or read any of the documents surrounding, not only the Original SDR but the M-SDR? I would venture to say very few or zero. SDR’s have been sitting in a basket since their inception and have not been used for their intended purpose. That, however, is changing.
As we discussed in 2016 the SDR is coming to the table and it will fulfill its intended purpose – when that will happen is the next question. Building puzzles takes time and, it appears, another large piece of the puzzle has been put into place with the development of the ACChain.
World Bank explains further
“This is a landmark development for China’s bond market and for the SDR as an international reserve asset,” said World Bank Group President Jim Yong Kim. “We are very pleased to support China’s growing role in global financial markets. World Bank issuance of SDR bonds in China will support the G-20’s objective of expanding the use of SDRs and help promote the development of China’s domestic capital market. It will also increase Chinese investors’ access to foreign currencies in the domestic bond market, while opening up new opportunities for international investors seeking high-quality investment products in the country.” [emphasis added]
In 2016 China was approved to join the SDR basket of currencies and was also approved to issue the M-SDR bond valued in Renminbi. The initial offering was oversold by 2.5 times the offering – not unusual, but shows people are interested. This means the M-SDR is now out in the market place. Where does it go from here? What are China’s plans, with this M-SDR priced in Renminbi?
This was another, very strong, indication of what is on the horizon and will be unfolding. We are seeing some of the unfolding right now – it happens everyday, its just some days experience bigger moves than others.
As we have reported over the past several weeks the Federal Reserve Note (FRN), a.k.a. U.S. dollar, is on life support. The changes that are currently in motion, combined with the policy changes that have been approved, will assure the FRN will no longer be the world reserve currency and this will have a direct impact on you, your family and your wealth. As was stated recently by China’s President, Xi Jingping, it is time for action and time to stop talking.
The next five weeks will mark one of the most significant transformations in the international monetary system in over 30 years. Source
Has anyone bothered to review what has been put in place over the past several years in regards to “freeing” the SDR and moving this monetary nightmare into the global monetary system? Apparently not too many, however, several people are all the sudden some kind of expert on the subject. I am not an expert on SDR’s and do not claim to be. I have, however, dedicated hundreds of hours and tens of thousands of words to research on the subject and feel comfortable in my analysis.
When I interviewed Dr. Warren Coats in 2016, Chief of the SDR, we covered some of the ground that he had been developing and discussing for several years, if not several decades, regarding the use of the SDR at the global level. Did I mention Dr. Coats was the Chief of the SDR at the IMF?
Dr. Warren Coats served on the IMF from 1976 to 2003. He became chief of the Special Drawing Rights (SDR) division in 1983 and remained until he retired. Dr. Coats has more experience with the SDR than anyone else on planet earth. He also knows a little something about currencies after working with well over twenty different countries to either strengthen their currency or develop a new currency. Dr. Coats understands gold and understands gold as money. Source
The SDR has been sitting quietly in the corner awaiting its turn in the spotlight. There will be no grand entrance as that is not how the IMF nor China wishes for this to unfold. Bring as little attention to this situation as possible and simply make it part of everyday life. Or as George Carlin said – Nobody seems to notice, nobody seems to care.
In another article we penned on this subject we noted:
As Dr. Coates describes it in Larry White’s latest article:
“I fully agree that short of a real crisis, developing and expanding the role and use of the SDR will be a gradual step by step process. The development of private SDRs, for example, requires no decisions by the IMF at all if the existing currency basket is used. This was the topic of my “Asian Infrastructure Investment Bank and the SDR” article.” —- Warren Coats
I would ask anyone that questions the SDR’s role in the new ACChain to please re-read the above underlined statement. It may have some bearing on the current arguments that the IMF has not approved the SDR to be used with the ACChain. M-SDR’s are that “private SDR” Dr. Coats references above.
This is part of the overall scheme, as was stated by the World Bank – China is being used, as was the original intent, to bring SDR’s to the citizens and have them folded into the current monetary system with little fanfare and no one really paying attention. By doing so, the current monetary system can be circumvented with almost zero noticeable change to the system.
As the IMF recently stated as one of the goals of de-cashing the nations, globally, was to create scenarios where no one even questions what is happening because they do not realize what is happening and they awaken one morning and the cash is all gone. This new system will assist in making that happen – right under your nose. Who’s excited about the cryptocurrency market? “WOW. I just became a gazillionaire with my shiny new fiat, based-on-faith, backed-by-nothing digital blips on a screen. WoooHoooo” I haven’t heard anything like that recently, have you? “Precious metals suck and I have lost soooooo much money on gold and silver.” Haven’t heard anything like that either, have you? I would argue this is part of the assimilation process, part of the enslavement process to suck more funds out of precious metals and into the new system of enslavement instead of a real system that has been proven to break the backs of the banking cabal throughout all of history. Since when did a “new currency” break the backs of the banking cabal? Gold, and only gold, has proven to have the fortitude to create real change and crush the banksters.
As we learned in a recent interview conducted by SGTReport, Brad Peters, Sr. Software Engineer, Intel, clearly shows the SDR as part of the code within the ACChain. No it does show any ties to the IMF, which is not a requirement, but it clearly shows the SDR, which is the real issue that Lynette Zang was bringing to the table during the SGTReport interview just a day prior to the conversation with Brad Peters. jsnip4 also made a video in an attempt to dispel what Ms. Zang had stated. jsnip4, Joe, “called the IMF” to ask about this ACChain and the IMF explained to him they knew nothing about it. Well, why would they when it is not necessary to have the IMF approve the use of the SDR in this manner? Did anyone bother to even think the SDR in the code of the ACChain is tied to the M-SDR bond issued by China and can be freely issued by China? It would appear not.
The conversation continues and I still know that gold is part of the current monetary systemand will be part of the future monetary system. What role it will play is yet unknown, but as I have stated time and again, China is not acquiring tons of gold to create more jewelry or produce more coins. The Belt and Road Initiative is not planning on having gold as payment across the “heartland” because they trust nations to do the right thing with their currency. Gold is money and everything else – EVERYTHING ELSE – is credit.
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