The marginal consumer is tapped out. The real culprit is not rising interest rates, but rather the prior fall to zero percent which incentivized consumers to load up on debt that they could not actually afford.
Anecdotally, my local boat and ATV dealer tells me that sales are slumping right now.
Macy’s is warning of a spike in customers who are failing to make credit card payments, adding to the evidence of mounting financial stress on consumers.
This situation is hurting Macy’s business, driving down credit card revenue by 36% year over year and contributing to a quarterly loss, he said. Citing worsening consumer leverage metrics, Macy’s is bracing for a further increase in “bad debt” in its credit card portfolio.
And sixty thousand a year barely qualifies you for the ‘marginal consumers’ category
“The real culprit is not rising interest rates, but rather the prior fall to zero percent”
Bingo. The real question was why?
“The real question was why?”
The destruction of Western Culture and specifically the USA is nigh and almost complete.
You will own nothing and be happy
My policy since 1982 has been, ‘if you can’t pay cash for something, you can’t afford it’.
With the exception of mortgages But only with the ability to maintain the payments and care for the upkeep. In other words live below your means … That will allow a buffer between living comfortably and losing everything.
And … you do not need to buy everything you want. Much of what people blow their money on are unneeded frivolities.
Defining attributes of conservatism. Liberalism then has you pay for their excesses eventually one way or another.
Old proverb; “Happiness is less about having what you want than wanting what you have”.
I agree, but people have been propagandized into consumerism for decades and everyone everywhere extolled the virtues of having more stuff.
Those of us who had parents that grew up during the Great Depression were fortunate, if we listened to the lessons they had learned.
Consumerism is the fault and that began over a century ago when capitalists saw how to make real profits. I’m a firm believer in capitalism, not a communist, but what we’re seeing today is a result of that system and the exhortations of Ayn Rand’s heroes unchecked.
I listened to my parents and others of their generation and it has served me well. I own my own home mortgage free, make no car payments, and sold my motor home years ago, I owe nothing to anybody. Thanks Mom and Dad for that good advice.
Area conservative reveals himself to be closeted leftist ignorant of what Ayn Rand believed. News at 6.
If ignorance is bliss you must be the happiest guy on the planet.
Go back to your gay orgy.
I remember way back when Walmart came to town. I walked the aisles thinking ‘All this stuff, destined for the landfill” That expensive car or truck, eventually flattened and sent for scrap metal.
Canada post announced a 2nd 1/4 loss of 250m. Claims the parcel business is killing them. It costs over $20 to mail a book within Alberta and now they’re raising the rates in September.
What’s a book?
Meanwhile, Canada post also owns purolator courrier (since 1993), it was their hedge against the other big courrier companies to get a piece of the pie.
Now you can just buy on Amazon with Prime and some non-descript van with a newly minted ‘Canadian’ will deliver your parcel, sometimes within the same day, instantly, if you bought a ‘book’ on your Kindle..
What’s a Kindle?
I get your point, but you don’t buy books on kindle, you only rent them
Kinda like renting a woman…
“Now you can just buy on Amazon with Prime and some non-descript van with a newly minted ‘Canadian’ will deliver your parcel, sometimes within the same day”
Awesome. Bless Amazon and all the new Canadians.
MAYBE they will deliver your parcel. I recently a package go missing from my apartment door after it was “delivered.” The courier took a photo as proof of delivery but I never did get the package. The building I live in has never had an issue with tenants taking parcels. In fact, it is not uncommon for a package to sit at someone’s door for several days when the tenant is away. I suspect the courier took my package; hope he has use for a cartridge of black toner.
The idea that people with money are willing to take a bad deal to get what they want?.. You cant squeeze out half of the market and expect the other half not to circle overhead like vultures.. They have money and they can pay cash.. Smell your weakness..
A buyers market .. You cant play the game so you declare yourself homeless.. How do you adjust squatters with interest rates?.. How do you fight off a invading army with interest rates?.. Save the world with taxes and regulations?.. A 6 foot, 200 lb man in a dress is not a woman.. Its a Viking..
Burn it down or flood it with migrants.. Our leaders and systems have failed.. Care to invest?..
Not to worry, Tiff Macklin and the BofC “has your back”.
That may be “will get you in the back.”
How many LPC/NDP voting Eloi are carrying a credit card balance and paying interest of 22% plus? It looks good on them.
Will team Trudeau, supported by its sycophants (the NDP), campaign on consumer debt forgiveness?
They might.
Then after the election it will be “We’re studying it. …and studying, …and studying.
Polls show that a lot of Liberal supporters are 60+. They are the ones with mortgages paid for a house that is only getting more and more expensive. They are fine and secure with this dysfunction hence their support for the SQ.
Yep your average Trudeau voter is a boomer Karen from Toronto. Electing this scumbag was their final selfish act.
Count every current and former retired government employee.
All praise the Liberal party.
I recently purchased some capital items that I did not need but are useful. Given the rate that these items inflated over the last 10 years, I view it as a good investment even if I have to borrow some of the money. A bunch of bankruptcies will prove me wrong but I think it more likely that Trudeau would drop cash from helicopters than fess up to economic realities. Also, New Green Deal will keep making manufacturing more expensive and large items difficult to produce; it may be quite awhile before the greenies are overthrown.
Even on consumable items, if you have extra $1000 cash, you are better off spending it now to buy detergents, toiletries, socks, etc. than leaving it in a bank account. You use them. They won’t perish. Current price trends likely will deliver you a 10% annual return (after tax).
I did the same thing – keep an eye on redflag deals – pickup a fridge that’s 60 % off or a dish washer, generator, etc. – sit on it until needed. – worse case sell it NIB.
That might have been good advice 10 years ago. The ‘free money’ era is over, Powell is not cutting the rates, and GICs pay decently now.
Which GICs are currently paying more than inflation plus taxation on the proceeds?
A 1-year should do it. At least at my bank. Keep in mind the inflation while elevated is falling.
1 yr GIC rate is 5.1%. CPI is 3.3%. Top marginal tax rate in Ontario is 54% but let’s us 44% which is for $100-150k.
After tax you have 2.85% return vs CPI of 3.3% so lose about 0.5% per year. Buying a basket of goods that don’t perish should earn you an after tax gain of about 3.3%; better than losing 0.5% and it seems inflation is actually higher than CPI.
But losing 0.5% on a GIC is actually an improvement as the years of near zero interest with 2% CPI was worse.
Today you can get ahead using your TSFA. I’m using my TSFA rather than prepaying mortgage (use to pay down at renewal).
Inflation, the real deal, is well over 15%.
When do the permanent UBI payments begin? Yes, Biden says every one of his policies has “worked” … they sure have … he’s impoverished more than half the country … just as planned. Now the elites will have full control of the new Totalitarian Communist US government. They’ll pay their voter base and will be in supermajority control. The US will resemble CA … very soon.
Minding your own business is always prudent, but I always wonder how people can afford big-ass trucks, boats and ATV’s and gymnastic class for their daughter, even buying lunch everyday…I think more than a few are either expecting the government will eventually take care of them (and that = poverty) or they’re expecting an inheritance.
Raising interest rates to fight supply side issues is a fraud. Lower energy prices and increase production and inflation will decrease dramatically.
This is all about destroying the west and nothing to do with “fighting “ inflation.
Surprising to see so many don’t see it.
Surprising to see the GOPes in Congress have gone along with all of it.
In regard to the GOP: https://spectator.org/an-inconvenient-trump-republicans-are-living-an-enormous-lie/
We get it: you don’t understand economics.
The inflation is a money supply issue, period, and that’s why it’s centered in services. The asset price inflation of a decade ago was centered in property and gold and commodities. Lowering energy costs is not going to help with that and embracing sane monetary policy not only won’t destroy the west but will make it far stronger. The alternative is to become Turkey/Hungary.
Our alternative appears to be emulating Communist China who regularly manipulates the value of their currency. What this does is destroy the commoners who cannot accumulate REAL assets in the face of manipulated currency values … and hence all asset values. It keeps the little people from actually improving their lives. It’s apparent the IDGIOTS running America’s currency have bowed THREE times … very deeply before the ChiCom model.
UM, I agree with you; inflation is always a money supply issue. This was the whole point of quantitative easing; produce an enormous amount of money to avoid a liquidity crisis on a bunch of overstretched financial investment houses. GE Financial was one of the worst, as was General Motors. It was reasonable at the time to suggest that they were nothing more than financial ponzi schemes with a minor sideline in manufacturing. It would have been better in the long run to simply let them collapse, accept that a recession was coming and deal with it. The whole point of a recession is to wipe out bad debt and bad investment.
But the scumbags in charge at the Fed at the time were unwilling to face the music. Hence they triggered the zero interest rate policy. And now the chickens have come home to roost.
You are right; Ward doesn’t understand economics.
While I am not sure ‘Ponzi scheme’ is really appropriate, it really doesn’t matter. It’s the least of the problems. What they call a ‘liquidity crisis’ in this case was the painful fixes we need. The 2008 financial crisis was not the crisis it was the cure to several years of bad capital allocation (and associated crummy growth) prior that occurred as a result of Greenspan cutting rates way too low in the wake of 9/11 and Bush devaluing the USD.
The real reason to damn these idiots to hell is Japan. Japan pioneered this crap before it was cool and it did nothing to get Japan working again. Money isn’t wealth. Liquidity isn’t always a good thing (prices are supposed to change). Japan is now staring down monetary bedlam of the kind that can have very scary results. Like ‘maybe Imperial Japan wasn’t all so bad’ kind of scary.
3 decades of scrupulously avoiding debt. My immediate family keeps telling me that I should spend money and enjoy life. Travel a little. Explore the world. With these low rates, you can afford a little debt.
I’m glad I didn’t listen to them, and my sacrifice is indeed paying off… BIG TIME!
True freedom is living a debt-free life, and staying debt free.
I took a cruise … ONCE … for a family reunion. When we boarded the Greyhound bus of the oceans (Carnival) cruise ship in Florida … you had to give the ship a credit card to back what they called a “Sail and Sign” card. You just sign your name and voila! You get a $30 Mai tai.
Well when the cruise ended … the ships teams of accountants were calling the names of all those people who had exceeded their credit limits and their cards would not cover their nice fun vacation. Dozens and dozens of names called and people lining up to settle their debts. I don’t want to say that most of the people lining up were of the black persuasion … but they were.
Funny thing … the cruise lines didn’t seem to mind that they had just wiped out someone’s credit, and they were now indebted to the cruise lines … probably at 28,5% interest. It actually appeared to be their business model … to show people who couldn’t afford it a real good time. Well … mediocre time.
Congratulations Everyone!
Despite his (silly) provocations, no one has posed nude for unme. No pudd-tuggin’ for it today.
Sorry … I couldn’t leave its stupidity and propaganda alone.
Looks like our esteemed host Denis is into usury.
We’re done.