Skyrocketing Consumer Debt & Falling Rates
With home mortgages, the primary collateral for the loan balance is the home itself. In the event of a future default, the lender can file a foreclosure notice and take the property back several months later. With automobile loans, the car dealership or current lender servicing the loan can repossess the car.

Homeowners often refinance their non-deductible consumer debt that generally have shorter terms, much higher interest rates, and no tax benefits most often into newer cash-out refinance mortgage loans that reduce their monthly debt obligations. While this can be wise for many property owners, it may be a bit risky for other property owners if they leverage their homes too much.

With credit cards, lenders don’t have any real collateral to protect their financial interests, which is why the interest rates can easily be double-digits about 10%, 20%, or 30% in annual rates and fees, regardless of any national usury laws that were meant to protect borrowers from being charged “unnecessarily and unfairly high rates and fees” as usury laws were originally designed to do when first drafted.

Zero Hedge has reported that 50% of Americans don’t have access to even $400 cash for an emergency situation. Some tenants pay upwards of 50% to 60% of their income on rent. A past 2017 study by Northwestern Mutual noted the following details in regard to the lack of cash and high credit card balances for upwards of 50% of young and older Americans today:

* 50% of Baby Boomers have basically no retirement savings.

* 50% of Americans (excluding mortgage balances) have outstanding debt balances (credit cards, etc.) of more than $25,000. 

* The average American with debt has credit card balances of $37,000, and an annual income of just $30,000. 

* Over 45% of consumers spend up to 50% of their monthly income on debt repayments that are typically near minimum monthly payments.


Rising Global Debt 


According to a report released by IIF (Institute of International Finance) Global Debt Monitor, debt rose to a whopping $246 trillion in the 1st quarter of 2019. In just the first three months of 2019, global debt increased by a staggering $3 trillion dollar amount. The rate of global debt far outpaced the rate of economic growth in the same first quarter of 2019 as the total debt/GDP (Gross Domestic Product) ratio rose to 320%.

The same IIF Global Debt Monitor report for Q1 2019 noted that the debt by sector as a percentage of GDP as follows:

Households: 59.8%

* Non-financial corporates: 91.4%

* Government: 87.2%

* Financial corporates: 80.8%


Rate Cuts and Negative Yields

As of 2019, there’s reportedly an estimated $13.64 trillion dollars worldwide that generates negative yields or returns for the investors who hold government or corporate bonds. This same $13.64 trillion dollar number represents approximately 25% of all sovereign or corporate bond debt worldwide. 


On July 31, 2019, the Federal Reserve announced that they cut short-term rates 0.25% (a quarter point). Their new target range for its overnight lending rate is now somewhere within the 2% to 2.25% rate range. This is 25 basis points lower than their last Fed meeting decision reached on June 19th. This was the first rate cut since the start of the financial recession (or depression) in almost 11 years ago dating back to December 2008.

It’s fairly likely that the Fed will cut rates one or more times in future 2020 meeting dates. If so, short and long-term borrowing costs may move downward and become more affordable for consumers and homeowners. If this happens, then it may be a boost to the housing and financial markets for so long as the economy stabilizes in other sectors as well such as international trade, consumer spending and the retail sector, government deficit spending levels, and other economic factors or trends.

We shall see what happens in the near future in 2020 and beyond.

* The blog article above is a partial excerpt from my previous article entitled Interest Rate and Home Price Swings in the Realty 411 Magazine linked below (pages 87 - 91):
December 4, 2008

Will The Bailout Loans Actually Help The USA?

All of these recent bailout plans passed in the past few months are supposedly going to help solve the financial problems of the American economy. Between the $700 Billion (or is it more like $5 to $10 Trillion) Banker Bailout Plan, the $250 Billion Bank "Investment" Plan to 9 major U.S. banks (including Wells Fargo  & Bank of America), and the TRILLIONS of dollars "lent" by the privately held "Federal" Reserve through some of these major ANONYMOUS lending facilities:

* The Primary Dealer Credit Facility (PDCF).
* The Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF).
* The Term Securities Lending Facility (TSLF).
* The Term Auction Facilities (TAF).
* The Commercial Paper Funding Facility (CPFF).
* The Money Market Investor Funding Facility (MMIFF).
* The temporary reciprocal currency arrangements (swap lines) with 14 other Central Banks around the world.

Here are a few other recent bailouts that most Americans are not aware of which have happened primarily within just the past six months:

* $800 billion to support mortgage consumer debt, * $100 billion to take over Fannie Mae, * $100 billion to take over Freddie Mac, * $150 billion for the Stimulus Package (Jan. '08), * $8 billion for Indy Mac Bank, * $29 Billion for Bear Stearns, * $143 + Billion for AIG (the largest insurance company in America), * 138 Billion for Lehman Brothers (via JP Morgan), * $25 + billion for the Big 3 automakers, and $620 billion for general currency swaps from the Feds.

These supposedly "short term" emergency lending and bailout facilities continue to be extended into the near future as the Credit Crisis continues to worsen in spite of all of these bailout actions taken to date. Essentially, we continue to place our investment banks and banks into more "debt" with the "Federal" Reserve. The "Fed", in turn, will begin to acquire more ownership interest in these once independently owned or publicly owned financial conglomerants. 

Now, the U.S. government via the U.S. Treasury is prepared to lend more than $7.4 TRILLION on behalf of the American taxpayers, or half of everything produced in the USA just last year, to bailout the financial markets which have effectively "collapsed" since the Credit Crisis officially began 15 months ago.

During the Alan Greenspan "boom" years, the average increase in credit issued by the "Fed" was ONLY $10 billion per month. Greenspan was seemingly the "easy money" Fed Chairman. His easy money supply help fuel the boom and subsequent bust in the high tech, telecommunications, stock, and real estate investment arenas. 

Sadly, Bloomberg is now reporting that the "Fed" is now lending 1,900 times the weekly average for the three years prior to the Credit Crisis. In addition, the total debt to GDP (Gross Domestic Product) is now over 350% to 450%. These debt to GDP ratios dwarf any economic time period in the history of America. 

Remember the following economic formula as you continue to read my Daily Blog:

Hyperinflation + Asset Deflation = Great Depression II.

For financial assistance while there are any banks left to lend, please visit my other website at


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