Monday, July 09, 2007

Yay!!! Americans Are Increasing Their Credit Card Debt

I love reading business stories like this:

WASHINGTON (AP) -- Consumer borrowing posted a hefty increase in May, reflecting the biggest jump in credit card debt in six months.

The Federal Reserve reported Monday that consumer credit rose at an annual rate of 6.4 percent in May, far above the small 1.1 percent gain of April. The advance was about double what analysts had been expecting.


The size of the increase caught economists by surprise, although they had been expecting a pickup from the sluggish performance in May, when the 1.1 percent rise in overall credit was the smallest gain since a 0.1 percent rise in October.

The overall economy, weighed down by a steep slump in housing, grew at a lackluster rate of 0.7 percent in the January-to-March quarter, the weakest showing in more than four years.

But economists believe strength in employment and consumer spending will help provide a stronger performance in the April-June quarter, with many looking for the gross domestic product to expand at a rate of 3.5 percent or even better.

The report on consumer borrowing will provide support for the view that consumer spending has held up, despite the weakness in home sales and soaring gasoline prices during the spring.

What good news - people are taking on more credit card debt than ever!!!

God, it brings a tear to my eye to see Americans doing their patriotic duty and taking on as much credit card debt as they can to keep the economy revving.

According to Bennet Sedacca at Minyanville, total household debt has exploded 100% of GDP, total credit market debt has risen from 150% to nearly 350% of GDP.

No wonder the economy hasn't tanked yet - we keep borrowing in order to keep it going.

You have to wonder how much longer that can go on, especially as inflation rises both domestically and across the globe and cheap money starts to disappear.

You also have to wonder what happens when some of the chips on that debt start to get called in.

When those chips start getting called in, most Americans will just take out another credit card and transfer all the debt to that one! And if all else fails, they can just claim bankruptcy. What's that? They can't? Who changed the rules on us?
Yeah, the new bankruptcy laws really change that - looks like the powers that be knew what was coming.
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