Posts Tagged ‘borrowing’

“Tom and Kate know they have a serious debt problem…

They spend their lives in a constant state of stress – trying to figure out ways to juggle their debt. They consistently live beyond their means. The only thing that limits their spending is the limit on their credit cards.

Tom and Kate are in the top 15% of U.S. households, bringing home a combined $160,000 per year. Yet like many people, they’re deeply in debt… spending everything they make and borrowing even more.”

-Bill McGilton

“For the first time in decades, neither party is even giving lip-service to balancing the Federal budget anymore. They simply don’t care…. The thing that matters to policymakers is how much the debt costs to maintain, not how much it costs to repay. That’s why you haven’t heard anything about it…. This problem will get exponentially worse as interest rates rise. Meanwhile, the government continues to add insult to injury by borrowing even more.” -Justin Brill

“This number (10-year treasury note) is probably the most important number in modern capitalism. It tells us the ‘risk-free’ price of money… which is to say, it tells us the cost of borrowing money, or more abstractly, the price of the future.

The more you borrow today, the more time you will have to take away from tomorrow to pay it back. Eventually, you run out of time… and out of luck.

To put that in more concrete (or wood and plastic) terms, the higher your mortgage rate… the longer you have to work to pay for your house.” -Bill Bonner

“Consumers now own a mountain of credit-card debt in excess of $1 trillion – the highest level since before the 2008 financial crisis.  Meanwhile, the savings rate for consumers dropped to just 2.9% as of November, versus nearly 6% just two years ago. The only time Americans have been saving less than today was 1929-1931 – during the peak of the Great Depression.  In other words, Americans are borrowing more and saving less than virtually any time in history.  How long can that last?” -P.J. O’Rourke

“As the Financial Times reported yesterday, more than 1 million U.S. consumers are ‘at least two months behind on car loan repayments,’ noting that the delinquency rate in the $1.1 trillion market hit its highest level since 2009. And that’s not just limited to subprime borrowers. That figure includes everyone with a U.S. car loan….

The financial Times also cites, ‘Delinquencies on credit cards also rose by about the same amount over the period to 1.79% – the highest since 2011. The rise in bad loans comes despite persistently low borrowing costs and unemployment levels – suggesting lenders may be letting consumers take on bigger debt burdens than they can handle.

Lending to consumers with weak credit scores has been one of the fastest-growing parts of the industry. Still, the increased delinquency levels follow a period of rapid expansion and could be a natural consequence of that growth. Separate figures published on Thursday by the New York Federal Reserve showed the total amount of debt held by American households rose last year at the fastest clip since 2007.'” -Porter Stansberry

“An individual doesn’t enrich himself by borrowing capital.  He can only enrich himself by carefully increasing his utility (his skills), saving his excess production, and investing that capital wisely to further increase his production.” –Porter Stansberry

When J.P. Morgan (the man) was called to testify before Congress about the ‘money trust’ and asked to explain why some firms received credit and some firms didn’t, he famously explained that the first test of any loan was the character of the man borrowing the money.” -Porter Stansberry