The above is a stunning chart because it highlights how quickly discretionary debt has been pulled off the shelf for most average Americans. Banks are selectively going after the quality borrowers while slowly cutting off borrowers who are at the end of their financial ropes. The blank check that was written to the banks will not be extended to these borrowers. Banks still have their platinum credit card with no limit attached to the US taxpayer. The Federal Reserve and US Treasury call this card the bank of too big to fail. At the same time most Americans have seen their credit limits slashed and have seen the amount of 0 percent offers go from a flood to a drought in their mailbox. The above chart went from a peak near $1 trillion to the current $800 billion outstanding in revolving debt. Some of this is being paid off but a large part of it is being written off via bankruptcy.
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